The Markit Japanese Composite Purchasing Managers Index (Composite PMI) is based on original survey data. These data are collected from a panel of firms that represent, and are based in, the Japanese manufacturing and service sectors.
The major composite index is composed of two minor indices. It is a weighted average of the Manufacturing Output Index and the Services Business Activity Index. These are all based on original survey data collected from a representative panel of over 800 Japanese-based firms that serve Japan’s manufacturing and service sectors. The survey data is collected mid-month. Survey responses reflect change in the current month compared to the previous month.
Is The Japanese PMI Composite Important?
Yes! PMI Data is an important macroeconomic indicator. Investors need to keep their finger on the pulse of the economy to form expectations of how various types of investments will perform. By tracking economic data such as the PMI numbers, investors will get a better picture of what the economic backdrop is for the various markets.
The stock market likes to see healthy economic growth because that translates to higher corporate profits.
Governments like to keep markets inflated because a portion of those corporate profits (and inflated assets) are converted into tax revenue.
The bond market prefers slow growth and is extremely sensitive to whether the economy is growing too quickly (inflation).
Apply risk management to your alternative investments.
I expect the easterly winds to push down the AUD/JPY this week. The Reserve Bank of Australia (recent dovish rhetoric) did not hike rates recently. Also the Chinese slowdown is putting overall downward pressure on commodity currencies.
However, I always rely on charts for navigable water, such as:
a weekly high-test with cci divergence
daily decelleration with cci divergence
top of a head & shoulders pattern on the daily chart
The Japenese Yen, a safe-haven (funding) currency, may rise above the AUD a bit this week to offset the expected decrease in the DXY. I will be on the lookout for an updraft to the DXY to signal a flattening or decreasing of the Yen.
Use wide stops, in this case above JPY89. Cap risk at a predetermined limit that does not change unless something outside of emotion justifies the change. My target holding period is no more than 10 days, depending on the Winds.
trade closed: stopped out at JPY89.2 risk capped at -1.9% of equity.
High probabilility of the DXY rebounding off 93, good probability of weekend gap in price action to fall, good CCI divergence on daily & weekly. Conservative lot size and wide stop due to Fed meeting this week. Stop loss set above USD00.75
trade closed:stopped out at USD.755 risk capped at -1.1% of equity.