USD/JPY – Yen Starts Week With Sharp Losses

The new month of September kicks off with a slow start, as the US markets are closed for the Labor Day holiday. The US dollar made the most of Monday’s Asian session and has posted strong gains, climbing close to one cent against the Japanese yen. USD/JPY is trading  in the low-99 range in the European session.  On Friday, UoM Consumer Sentiment fell, but still beat the estimate. In Japan, Capital Spending stopped a streak of two straight declines. There are no US releases on Monday.

The markets were unsteady last week in anticipation of an expected US military strike against Syria, after a chemical attack in the war-torn country killed hundreds. However, the attempt by the US to secure a coalition ran into trouble, and President Obama said on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later.

Over in Japan, Capital Spending, which is released on a quarterly basis, was up sharply.. The indicator climbed from -3.9% in Q1 to a flat 0.0% in Q2. The estimate stood at -2.0%. This marks the first time that the indicator has beaten the forecast since Q1 of 2012. The Japanese economy is showing signs of improvement, but business and consumer spending releases will have to point upwards if the economy is to recover from years of stagnation.

When will the Federal Reserve taper QE? The Federal Reserve has not given any hints, and recent statements from Fed policymakers underscore divisions regarding the timing of such a move. What is clear is that stronger US numbers will increase the likelihood of the Fed acting sooner rather than later. This means that US releases, especially employment data, will be under the market microscope and traders should be prepared for the Fed to begin tapering at any time, which will likely bolster the US dollar.

 

USD/JPY for Monday, September 2, 2013

Forex Rate Graph 21/1/13

 

USD/JPY September 2 at 11:25 GMT

USD/JPY 99.28 H: 99.42 L: 98.35

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
97.18 97.83 98.43 99.45 100.00 100..85

 

  • USD/JPY is up sharply in Monday trading. The pair posted modest gains in the Asian session and jumped sharply in European trading, crossing above the 99 line.
  • The pair is facing resistance at 99.45. This is a weak line and could be tested if the yen continues to slump. There is stronger resistance at the critical number of 100.
  • On the downside, USD/JPY is receiving support at 98.43. This line has strengthened as the pair trades at higher levels. This is  followed by support at 97.83.
  • Current range: 98.43 to 99.45

 

Further levels in both directions:

  • Below: 98.43, 97.83, 97.18, 96.20, 95.60 and 94.29
  • Above: 99.45, 100.00, 100.85 and 101.66

 

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Monday trading. This is reflected in the current movement of USD/JPY, as the pair is showing little movement. The ratio continues to have a strong majority of long positions, indicative of strong trader bias towards the dollar continuing to push to higher ground.

USD/JPY has jumped higher, pushing above the 99 line. With the US markets closed for the Labor Day holiday we can expect the pair continue to trade quietly during the day.

 

USD/JPY Fundamentals

  • 23:50 Japanese Capital Spending. Estimate -2.0%. Actual 0.0%.

 

*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.