USD/JPY – Steady Ahead of US, Japanese Data

It’s a quiet start to the week for USD/ JPY. The pair is trading in the mid-97 range in Monday’s European session. In economic news, US releases were a big disappointment on Friday. Core Durable Goods Orders recorded its third consecutive decline, while UoM Consumer Sentiment slid to a ten-month low. Today’s major event is US Pending Home Sales. In Japan, we’ll get a look at Household Spending and Retail Sales later on Monday.

Last week ended on a disappointing note as key US releases posted declines. Core Durable Goods Orders dropped -0.1%, well below the estimate of a 0.6% gain. This was the third straight decline for the indicator. Durable Goods Orders looked much better, posting a strong gain of 3.7%. UoM Consumer Sentiment couldn’t find its footing, dropping from 77.5 to 73.2 points, its weakest showing in 2013. The estimate stood at 78.2 points. If we don’t see stronger releases out of the US this week, the dollar could continue to struggle.

US employment releases looked weak last week, continuing to raise concerns about the health of the US economy. On Thursday, Unemployment Claims came in at 350 thousand, above the estimate of 343 thousand. This weak figure came on the heels of Non-Farm Payrolls, which slipped to a six-month low. The US unemployment rate dipped to 7.2%, a five-year low, but this does not point to increased employment, as the participation rate remained at 63.8%, its lowest level since 1978. These figures indicate that the US labor market continues to have difficulty creating new jobs.

The US government is again functioning and a default has been averted, but the recent agreement hammered out in Congress provides short-term relief only, as it raises the debt ceiling until early February and funds the government until mid-January. The underlying budgetary issues remain unresolved, consumer confidence has been shaken and employment numbers are not looking good, as we saw last week. Given this situation, the Fed is unlikely to reduce QE until early 2014, perhaps as late as March or April.

 

USD/JPY for Monday, October 28, 2013

Forex Rate Graph 21/1/13

USD/JPY October 28 at 10:45 GMT

USD/JPY 97.63 H: 97.70 L: 97.44

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
95.06 96.00 97.18 98.15 98.92 100.00

 

  • USD/JPY remains subdued in Monday trading, as the proximate support and resistance lines (S1 and R1 above) remain in place.
  • The support level of 97.18 is a weak line and could face pressure if the yen continues to improve. This is followed by strong support at the round number of 96.00.
  • On the upside, 0.9815 is providing resistance. This is followed by strong resistance at 98.92, which is protecting the 99 line.
  • Current range: 97.18 to 98.15

 

Further levels in both directions:

  • Below: 97.18, 96.00, 95.06 and 94.20
  • Above: 98.15, 98.92, 100, 101.19 and 102.53

 

OANDA’s Open Positions Ratio

USD/JPY ratio is showing movement towards long positions in Monday trading. This is reflected in the movement of the pair, as the dollar has posted very slight gains against the yen. The ratio continues to be dominated by long positions, indicative of a strong trader bias towards the US dollar reversing direction and moving higher.

The pair has started the week with little movement. With the US releasing key housing data later in the day, we could see some volatility from the pair if the reading is not in line with market expectations

 

USD/JPY Fundamentals

  • 13:15 US Capacity Utilization Rate. Exp. 78.1%.
  • 13:15 US Industrial Production. Exp. 0.5%.
  • 14:00 US Pending Home Sales. Exp. 0.5%.
  • 23:30 Japanese Household Spending. Exp. 0.7%.
  • 23:30 Japanese Unemployment Rate. Exp. 4.0%.
  • 23:50 Japanese Retail Sales. Exp. 1.9%.

 

*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.