The Japanese yen continues to struggle, as USD/JPY pushed above the 96 line in Thursday trading. The pair has now climbed into the mid-96 range. Will we see new multi-year lows for the Japanese currency? In economic releases, US data looked very sharp, notably Retail Sales and Core Retail Sales, both of which beat the market estimates. Looking at Thursday’s events, Japanese Revised Production gained just 0.3%, missing the forecast of a 1% gain. The US will release two key indicators later in the day – PPI and Unemployment Claims. The markets will be hoping that US employment numbers continue to sparkle.
Recent US data has looked sharp, notably employment numbers and consumer spending data. On Wednesday, Retail Sales and Core Retail Sales both posted solid numbers. Core Retail Sales gained 1.0%, while Retail Sales climbed 1.1%. Both exceeded their estimates of 0.5%, and posted five-month highs in the process. The markets have reacted with a thumbs up, and this has boosted the US dollar. The markets were also pleased to see positive data in other sectors as well, as Import Prices, Business Inventories and Crude Oil Inventories were all better than expected. After months of mixed data out of the US, the string of strong numbers is welcome news. We’ll see if the positive trend continues, as the US releases Unemployment Claims and PPI later on Thursday. In Japan, there was disappointing news as Revised Industrial Production gained just 0.3%, down sharply from the previous release, which posted a robust gain of 2.4%. The weak gain was well off the estimate of 1.0%.
USD/JPY has again broken through the 96 level, and seems game for more gains, as the markets expect the Bank of Japan to implement further monetary easing measures. These sentiments were reinforced following tough comments from the incoming BOJ head. During confirmation hearings, Haruhiko Kuroda declared that he would do “whatever it takes” to beat deflation and reach the government’s inflation target of 2.0%. The incoming governor reiterated that he is confident that an effective monetary policy could defeat deflation, which continues to weigh heavily on the Japanese economy. Kuroda noted that the current amount of asset buying by the BOJ will not achieve the 2.0% inflation goal. There are media reports that Kuroda may start implementing additional easing immediately upon assuming office next week, rather than wait until the BOJ’s next policy meeting in April. There were no surprises as the BOJ released the minutes of its February meeting, at which the central bank maintained its monetary policy. Some members stated they were in favor of buying Japanese Government Bonds with longer remaining maturities if additional monetary easing is needed in the future.
USD/JPY for Thursday, March 14, 2013
USD/JPY 96.52 H: 96.45 L: 95.68
The US dollar continues to pummel the yen in Thursday trading, as the pair has climbed into mid-96 territory. The pair faces strong resistance at 97.24. This line has not been tested since August 2009. On the downside, 96.02 is protecting the 96 level. There is stronger support at 95.27.
- Current range: 96.02 to 97.24
Further levels in both directions:
- Below: 96.02, 95.27, 94.59, 93.14 and 92.53
- Above: 97.24, 98.45, 99.38 and 99.98
OANDA’s Open Position Ratios
USD/JPY ratio has gone quiet, after pointing to movement in long positions in the Wednesday session. This lack of activity is not currently reflected in the movement of the pair, as the yen continues to drop against the dollar. If these downward trend continues, we can expect the ratio to show more activity.
The Japanese yen continues to struggle, as the pair has again broken above the 96 level. Recent strong US releases have resulted in a broadly stronger dollar, and if today’s US key releases (PPI and Unemployment Claims) look sharp, we could see the greenback post further gains at the expense of the yen.
- 4:30 Japanese Revised Industrial Production. Estimate 1.0%. Actual 0.3%.
- 12:30 US PPI. Estimate 0.7%
- 12:30 US Unemployment Claims. Estimate 348K
- 12:30 US Core PPI. Estimate 0.2%
- 12:30 US Current Account. Estimate -111B
- 13:00 FOMC Member Sarah Bloom Raskin Speaks
- 14:30 US Natural Gas Storage. Estimate -136B
- 17:00 US 30-year Bond Auction
- 21:30 US Bank Stress Test Results
*Key releases are highlighted in bold
*All release times are GMT
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