Pair’s Outlook
USD/JPY decided not to pull back after breaking out of the channel and prolonged the decline down to the weekly S2 level. If there is a rally today, as suggested by the daily technical indicators, it is likely to stay limited by the monthly PP and weekly S1 at 109.50/20. The current target is a critical support area between 107 and 106.65 yen, which is formed by the monthly S1, but even more importantly-by the 38.2% retracement of the four-year up-move started back in 2012. Accordingly, the risks are to the upside.

Japan’s exports dropped in April at the quickest pace in three months as a stronger Yen and weakness in China and other emerging markets take their toll on the country’s shipments, denting growth prospects for the current quarter. Overseas shipments plunged 10.1% in April from a year earlier, the Ministry of Finance said, while economists had predicted a 10.0% annual decline and following a 6.8% decrease in March. It was the seventh straight month of declines and the biggest since 12.9% in January, when Japanese shipments to Asia slowed sharply ahead of the Lunar New Year holidays. The drop was likely exaggerated by a fall in US-bound car exports due to supply-chain disruptions caused by last month’s earthquakes in southern Japan, but a surging Yen and tepid global demand are clouding the outlook for the year.

China’s industrial production, retail sales and investment undershot expectations in April, despite Beijing’s aggressive easy-money policies in the first quarter, indicating ongoing weakness in the world’s second-biggest economy. Industrial output increased 6.0% year-over-year in April, down from 6.8% growth in March, the National Bureau of Statistics reported, coming in below economists’ forecast for a 6.6% gain. In addition to that, retail sales rose by a less-than-predicted 10.1% in April compared with a year earlier, slowing from March’s 10.5% year-over-year surge. Fixed-asset investment in urban areas grew by a weaker-than-expected 10.5% year-over-year in the January-to-April period, compared with an annual increase of 10.7% for the first three months of 2016.

Bearish traders attempted to prolong a correction as lower as possible yesterday, but they met a tough support in face of the weekly pivot point at 1,272.92. Considering that this demand is reinforced by the monthly pivot $20 from below, gold’s bears decided not to take additional risks. The bullion’s spot closed just under the 1,280 mark. Both daily and weekly aggregate technical indicators are pointing to a recovery, as there are no single signals to sell the metal. In the wake of these events, the bulls keep eyeing the 2015 peak at 1,307.06

FOMC statement used to have little impact on behaviour of the USD/CAD currency pair, which fixed a minimal four-pip decrease in daily value over Wednesday. The short-term outlook remains tilted to the South, provided there is a dense supply cluster located between 1.2722 and 1.28. Here the monthly S1 is backed by the weekly pivot point and downward-sloping 20-day SMA. Dips lower are expected to be shallow, as the first weekly support line is going to meet USD/CAD as soon as at the 1.2509 mark. As for the daily technical indicators, they are still having no distinct bias in any direction, as three "buy" studies are balanced by the same amount of "sell" signals.

The Euro zone’s private sector kept expanding moderately in April, but failed to gather momentum. The Markit Composite PMI, a forward-looking reading tracking development in the Euro bloc’s manufacturing and services sectors came in at 53.0 in the reported month, down from 53.1 seen previously, when it rebounded from February’s 13-month low. The manufacturing PMI declined to 51.5 in April, compared with 51.6 in the preceding month, while the services sector gauge rose to 53.2, slightly ahead of 53.1 in March, but undershooting economists’ expectations of 53.3. The Euro zone’s economic growth continued to be weak as the bloc’s GDP expanded 0.3% in the final three months of 2015 on a quarterly basis, the same pace as in the three months through September. For all of 2015, economic output of the 19 countries using the Euro was up by 1.6% year-on-year.

Activity levels across Japan’s manufacturing sector contracted sharply in April. Japanese manufacturing activity contracted this month at the fastest in more than three years and output fell the most in two years, after earthquakes halted production in the southern manufacturing hub of Kumamoto. The preliminary Nikkei Manufacturing Purchasing Managers Index fell 1.1 points to a seasonally adjusted 48.0 in April from a final 49.1 in March. The data was way down the expected 49.6 figure. The PMI remained below the 50 threshold that separates contraction from expansion for the second consecutive month and showed activity contracted the most since January 2013. Moreover, the output component of the PMI index also fell to 47.9 from 49.8 in the previous month to show the fastest contraction since April 2014. The sharp drop in total new work was underpinned by the fastest fall in international demand since December 2012, and following the two earthquakes in Kumamoto, the outlook of the goods-producing sector now looks especially uncertain.

The jobless total in the UK increased for the first time in almost a year. The UK unemployment rose by 21,000 to 1.7 million between December and February, and that was the first increase since the May-July period of the last year, the Office for National Statistics reported. The number of people claiming unemployment-related benefits increased by 6,700 in March to 732,100, the first monthly rise since last August. Meanwhile, the unemployment rate remained at anticipated 5.1%, which is still down by 0.5% on a year ago and the lowest since 2005.