JPY/USD – Yen Keeps Dropping as BOJ Takes Easing Steps

The Japanese yen continues to fall, as the Bank of Japan began implementing new easing steps which were announced at last week’s policy meeting. USD/JPY crossed above the 98 level on the weekend, and has climbed to levels not seen since in May 2009. The pair was trading in the 98.60 range in Monday’s European session. In economic news, Japanese Current Account dropped to a five month low. The US continued to post weak numbers, as Friday’s Non-Farm Payrolls were awful. In Monday’s lone release out of the US, Federal Reserve head Bernard Bernanke will address a conference hosted by the Federal Reserve of Atlanta.

USD/JPY continues to plow higher, as the pair is now above the 98 level. The BOJ wasted no time after its policy meeting, and made good on its promise to purchase large amounts of government bonds. This move is aimed at pushing down longer-term interest rates in order to encourage businesses to borrow and spend more in order to increase activity in the economy and create inflation.  The BOJ purchased JPY 1 trillion in 5-10 year bonds, and an additional JPY200 billion in bonds with maturities exceeding 10 years. Japanese Current Account fell from JPY0.36 trillion to JPY 0.00 trillion, well below the estimate of JPY0.46 trillion. This weak reading is also weighing on the Japanese currency, as a lower Current Account means foreigners are buying less yen to purchase Japanese products. There was some good news from Economy Watchers Sentiment, which climbed sharply from 53.2 points to 57.3, and beat the estimate of 56.3 points.

In the US, talk of a deepening recovery is being replaced by concerns about the direction the economy, as the US continues to post out dismal numbers. With every major release over the past two weeks failing to meet expectations, the markets are justifiably becoming increasingly anxious. The data comes from sectors throughout the economy – housing, manufacturing consumer confidence and employment releases have all missed their estimates. On Friday, Non-Farm Payrolls followed the string of dismal releases, posting its worst showing since July 2012. There were 88 thousand new jobs created, way below the estimate of 198 thousand. Will we see a turnaround in this week’s numbers? If not, we could see some volatility in the currency markets.

USD/JPY for Monday, April 11, 2013

USD/JPY 98.66 H: 99.00 L: 98.30

USD/JPY continues to push higher, and has crossed above the 98 level. The pair touched a high of 99.00  in the European session. USD/JPY is receiving weak support at 98.45. This line has already seen activity in Monday trading, and this could continue. There is a stronger support level at 97.24. On the upside, 99.57 is the next line of resistance. This is followed by the all-important round number of 100.

• Current range: 98.45 to 99.57

Further levels in both directions:

• Below: 98.45, 97.24, 96.03, 95.27 and 94.59
• Above: 99.57, 100, 100.54 and 101.81

OANDA’s Open Position Ratios

USD/JPY remains quiet as we begin the new trading week. This is reflected in what we are seeing from the pair, which is little activity. The ratio continues to show a fairly close split between long and short positions, indicating that trader sentiment is not biased towards any particular movement by the pair.

USD/JPY is subdued at present, but the trend has been all upward since last week’ BOJ policy meeting, which sent the yen reeling. With the pair briefly touching the 99 mark, the psychologically-important number of 100 is in striking distance. The yen continues to be under pressure as the BOJ proceeds full steam ahead with its aggressive easing measures.

USD/JPY Fundamentals

• 5:00 Japanese Economy Watchers Sentiment. Estimate 56.3 points. Actual 57.3 points.
• 11:15 US Fed Chairman Bernard Bernanke Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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