USDJPY. Japan’s Bank Lending Report (7 July 23:50 GMT)

Growing global geopolitical risks are forcing many investors to direct their funds to safer economies like Japan. However, the strengthening of the Yen is having a negative effect on the inflation. That’s precisely why one shouldn’t underestimate the importance of such reports as Bank Lending – an economic indicator directly connected to the level of inflation.

If the data published this Friday exceeds expectations, the price of Yen is likely to rise.

Due to the fact that investors all over the world reallocate their funds to Japanese economy Yen is strengthening and has a negative impact on the inflation. Last week CPI data was published and it is still in the negative zone and it will have a massive negative impact on monetary policy in the long-run:

..retail sales report was lower that the forecast (it has a massive impact on CPI):

..also, preliminary Industrial Production statistics was significantly worse that expected:

It means that the leaders of Bank of Japan have tough period – Japanese Yen strengthening might cause further rate decrease as well as new massive money emissions. But as long as “Brexit” is on the agenda – there will be a downward trend on USDJPY chart.

USDJPY chart:

Sure, fundamental analysis should prevail at the moment on USDJPY. But traders should not forget to analyze the overall dynamics of rate movement. According to the indicator of technical analysis “Awesome Oscillator” upward correction is yet to be finished and traders have to be accurate with PUT options for a longer expirations.