Halister News

(Bloomberg) -- USD/JPY may rally to test resistance at 50-DMA of 110.28 in short-term if Japan’s 1Q GDP undershoots forecasts, boosting prospects of govt stimulus and/or further BOJ easing, Bloomberg strategist David Finnerty writes.

• Nation’s 1Q GDP grew 0.1% q/q SA after 0.3% contraction in 4Q, according to median est. of economists in Bloomberg survey; range of ests. are from -0.4% to +0.4%; data are due at 8:50am local time tomorrow
• A failure of 1Q GDP to post a positive number could increase the probability of fiscal stimulus to help lift domestic demand; BOJ may also consider undertaking more QQE as a low GDP reading could reduce inflation and inflationary expectations
• Prospects of fresh fiscal stimulus or additional QQE are likely to generate risk-on sentiment, thereby pushing both USD/JPY and Nikkei 225 higher
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.