USD/JPY – Quiet Trading as Markets Eye US Employment Release

USD/JPY is steady in Thursday trading, as the pair continues to trade in the mid-99 range. The pair touched as high as 99.87 on Wednesday, but the 100 line remains elusive, at least for now. The US released the minutes of the FOMC’s most recent meeting, which pointed to a split among members as to what steps to take (or not take) with regard to the current round of quantitative easing.

On Wednesday, Japanese Core Machinery Orders rebounded from a sharp decline, and gained posted an impressive 7.5% gain. The estimate stood at 6.9%. Corporate  Price Goods Index disappointed, as the indicator continues to point to deflation. The indicator fell by 0.5%, slightly below the estimate of -0.4%. M2 Money Stock was within expectations, gaining 3.0%. The estimate stood at 2.9%.Today’s highlight is US Unemployment Claims, In addition to being a key indicator, it is the market’s first look at US numbers this week. The only Japanese release today is Tertiary Industry Activity.                                      

The markets are keeping a close eye on USD/JPY, which remains very close to the 100 level. The Japanese currency has not been at such low levels since April 2009. Earlier this week, the minutes from the most recent BOJ policy meeting  were released, and there were no surprises. The minutes indicated that BOJ board members were set to unleash a radical overhaul of monetary policy. The BOJ has certainly not disappointed, wasting little time in implementing further easing measures. The BOJ plans to double its asset purchase program by 2015, 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 so as to increase activity in the economy and eliminate inflation, which has hobbled the Japanese economy for 15 years. The BOJ began its purchase of government bonds on Monday, and said it would purchase JPY 1 trillion in 5-10 year bonds, and an additional JPY200 billion in bonds with maturities exceeding 10 years.  Meanwhile, the yen remains under pressure as BOJ Governor Haruhiko Kuroda said that the BOJ could extend its monetary easing program beyond two years if needed, in order to reach the target of 2% inflation.

The US continues to churn out disappointing numbers, and every key release over the past two weeks has fallen below expectations. The data comes from across the economy - manufacturing, housing, consumer confidence and employment numbers have all missed their estimates. Employment numbers were dismal, and have helped the euro post impressive gains against the US dollar this week. Has the US recovery stalled? Unemployment Claims will be released on Thursday, and additional major releases are scheduled for Friday. If the US can turn things around and post some stronger numbers, we could see the dollar improve after losing ground to major currencies such as the euro and British pound.

 
USD/JPY for Thursday, April 11, 2013

Forex Rate Graph 21/1/13

USD/JPY April 11 at 11:15 GMT

USD/JPY 99.56 H: 99.77 L: 99.36

 

S3 S2 S1 R1 R2 R3
96.03 97.24 98.45 99.57 100.00 100.54

 

In Thursday trading, USD/JPY is trading quietly. On the upside, the pair is testing resistance at 99.57. The pair broke through this line earlier, but has retracted. The next line of resistance is the psychologically significant line of 100. On the downside, 98.45 is a strong support line. It is followed by 97.24.

  • 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 ratio is pointing at movement towards short positions. This is not currently reflected in the pair, which is trading quietly without any significant movement in either direction. The activity in the ratio could be an early indication that the yen will recover from its steep drop. Despite the recent movement in the ratio towards short positions, long positions still enjoy a slight majority.

Dollar/yen has settled down, but the markets are on their toes, waiting to see if the pair can make that final push over the 100 hump. The US will release Unemployment Claims later today, and this could lead to some volatility in the pair.

 

USD/JPY Fundamentals

  • 12:30 US Unemployment Claims. Estimate 362K.
  • 12:30 US Import Prices. Estimate -0.4%.
  • 12:30 US FOMC Member James Bullard Speaks.
  • 14:30 US Natural Gas Storage. Estimate -12B.
  • 17:00 US 30-year Bond Auction.
  • 23:50 Japanese Tertiary Activity. Estimate 0.8%.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.