Empire State Manufacturing Index Reading Reached Lowest in Last Six Years – USD/JPY

Japan – Preliminary GDP

On Sunday, at GMT 11:50 p.m., the Japanese Cabinet Office released the national quarter over quarter Preliminary GDP figure, which measures the changes in the value of all goods and service produced by the Japanese economy during the last quarter. This figure is usually published after adjusting inflation and it is considered as one of the key leading economic indicators.

Since the preliminary GDP figure is published first, it usually has the highest market impact. Hence, binary options investors consider it to be a leading indicator of the Japanese economy.

Last quarter, the Japanese Preliminary GDP was set at 1.0% growth. However, over the course of the second quarter (Q2’2014), the outlook for the Japanese economy was not so optimistic. Analysts were expecting the Preliminary GDP to come out in negative -0.5%, and the actual figure came out slightly better, at -0.4%.

United States – Empire State Manufacturing Index

Today, at GMT 12:30 p.m., the Federal Reserve Bank of New York released the empire state manufacturing index, which measures the level of a diffusion index by surveying 200 manufacturers in the state of New York.

Since businesses are the first to react to changing market conditions, binary options traders consider this survey to be an important leading indicator of New York’s economic health. As New York makes up a large portion of the US economy, it can signal a larger trend in the overall US economy.

In July, the empire state manufacturing index reading came out at 3.9 and the forecast for August was set at an optimistic reading of 5. However, the actual index reading came out much worse than what the market was expecting, at negative -14.9.

Trade Recommendation for the USD/JPY


Since July 8, the USD/JPY price has been gradually climbing up and reached near the important resistance level around 124.50. However, at this price level, the USD/JPY found strong resistance and it retraced back to the uptrend line.

Last week, on August 12, the USD/JPY formed a large bearish outside bar (BEOB). But, since then the price has traded within the high and low of this daily bar.

As the empire state manufacturing index reading came out much worse than what the binary options market was expecting, the current fundamental outlook for the USD/JPY is bearish.

Under the circumstances, it is recommended that traders consider placing a PUT order for the USD/JPY with their binary options brokers, once the price penetrates below the low of August 12, which is at 123.78.

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About our Forex and Binary Options Analyst:  Asif Imtiaz

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