USD/JPY – Yen Improves, Test 99 Level

After coming close to the 100 level, USD/JPY has retracted. The pair was trading in the low-99 range in European trading.  In the US, the bad news continued as Core Durable Goods looked weak. Today’s highlight is US Unemployment Claims, and the markets will be hoping that this market-mover beats expectations. In Japan, Tokyo CPI will be released later in the day. This indicator will be a good test as to the success of the government to combat deflationary trends in the economy.

The markets are watching carefully as the Bank of Japan meets for a policy meeting on Friday. This will be just the second policy meeting under Governor Haruhiko Kuroda on Friday, who took over the position recently. Kuroda has introduced aggressive monetary easing steps, such as doubling quantitative easing, in an attempt to stamp out deflation, which has hobbled the Japanese economy for years. The BOJ is continuing with its aggressive monetary easing policy, but is not expected to announce new measures. The BOJ will also release its semi-annual outlook report, which will give analysts insight into the central bank’s take on inflation and other economic considerations.

Meanwhile, the OECD has weighed in on developments in Japan. The well-respected organization said it was encouraged by the government’s efforts to restore growth by easing monetary policy and achieve a 2% inflation target. However, the OECD noted its concern about the rising national debt, which is more than double the size of the Japanese economy. However the rating agency Standard & Poor was less effusive in its praise, stating that it had found little evidence of the economy improving, and warned that a downgrade to Japan’s debt was a real possibility.

Over in the US, the streak of weak key releases continues. Since late March, almost all key releases have missed expectations. The bad news continued on Wednesday, as Core Durable Goods declined by 1.4%. This was well below the estimate of a 0.5% gain. The markets are concerned about the pace and extent of the US recovery, and await the release of Unemployment Claims, one of the most important economic indicators, later today.

 

USD/JPY for Thursday, April 25, 2013

Forex Rate Graph 21/1/13

USD/JPY April 25 at 11:10 GMT

 USD/JPY 99.17 H: 99.55 L: 98.99

 

USD/JPY Technical

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

 

USD/JPY has edged lower in Thursday trading.  On the downside, the pair is receiving support at 98.45. The next support level is at 97.24. The pair faces resistance at 99.57. This line could see some activity if the US dollar pushes higher. This is followed by resistance at the all-important 100 level.

  • Current range: 98.45 to 99.57

 

Further levels in both directions:

  • Below: 98.45, 97.24, 96.03 and 95.27
  • Above: 99.57, 100, 100.54, 101.81 and 102.57

 

OANDA’s Open Position Ratios

USD/JPY is showing movement in the direction of long positions. This could be an indication that the US dollar will improve. Currently, we are not seeing this from the pair, as the yen has edged higher against the dollar. Long positions make up a majority in the ratio, indicating that trader sentiment is biased towards the pair pushing higher.

After coming very close to the 100 level, the yen showed some spirit, and the pair has moved downwards. We could see more activity from USD/JPY during the day, as the US releases key employment data.

 

USD/JPY Fundamentals

  • 12:30 US Unemployment Claims. Estimate 352K
  • 14:00 US Treasury Secretary Jack Lew Speaks
  • 14:30 US Natural Gas Storage. Estimate 33B
  • 23:15 Japanese Manufacturing PMI.
  • 23:30 Tokyo Core CPI. Estimate -0.4%
  • 23:30 Japanese National Core CPI. Estimate -0.4%

 

*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.

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.