USD/JPY – Dollar At Six-Month Highs as Yen Slide Resumes

The yen continues to lose ground in Monday trading. USD/JPY has pushed up to the high-101 range, it highest levels since May. In economic news, the Philly Fed Manufacturing Index looked awful on Friday, slumping to a six-month low. It’s a quiet start to the week, with Pending Homes Sales the only US release on Monday. In Japan, the Bank of Japan will release the minutes of its last policy meeting later on Monday. We’ll also get another look at Japanese inflation, with the release of the Corporate Services Price Index. The markets are expecting a strong reading, with an estimate of 0.9%.

There was positive news on the US employment front, as Unemployment Claims dropped to 323 thousand, a seven-week low. This was well below the estimate of 333 thousand. The strong figure will likely increase speculation as to when the Fed will step in and taper QE, although such a dramatic move is not considered likely before early 2014. The markets will be keeping a close eye on JOLTS Job Openings, which will be released later on Friday.

Low inflation indicators have been a major concern in Japan and the Eurozone, and the US economy is not immune from this problem. The Producer Price Index continues to look weak, posting a decline of 0.2% in October. This was the index’s second straight decline. Core CPI showed a weak gain of 0.1%, and CPI dipped to -0.1%. These weak numbers point to slow economic activity and slow economic growth in the US.

As expected, the BOJ stated in a policy statement on Thursday that it was maintaining its aggressive monetary stimulus program, which aims at raising inflation to 2%. At a follow-up press conference, BOJ Governor Haruhiko Kuroda noted that the US and Eurozone economies are improving and said that the Japanese economy was moving in line with the Bank’s forecasts. Under the BOJ’s monetary policy, inflation has risen and economic indicators are up, but the yen has plunged and continues to trade at multi-month lows.

 

USD/JPY for Monday, November 25, 2013

Forex Rate Graph 21/1/13

USD/JPY November 25 at 10:25 GMT

USD/JPY 101.81 H: 101.92 L: 101.14

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
98.92 100.00 101.19 102.53 103.30 104.17

 

  • USD/JPY has posted gains in Monday trading. The pair is trading close to the 102 line and continues to put pressure on the yen.
  • The pair continues to face resistance at 102.53. This is followed by a resistance line at 103.30, which has remained intact since late May.
  • 101.19 has reverted to a support role. It is followed by support at the key line of 100.
  • Current range: 101.19 to 102.53

 

Further levels in both directions:

  • Below: 101.19, 100.00, 98.92, 98.15, 97.18 and 96.00
  • Above: 102.53, 103.30, 104.17 and 105.70

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Monday. This movement is reflected in the current movement of the pair, as the dollar has moved higher. The ratio is close to an even split between long and short positions, which reflects a lack of trader bias as to which direction the pair might take.

The US dollar is again on the move, knocking on the doorstep of the 102 level. With the US releasing key housing data later in the day, we could see some volatility from the pair.

 

USD/JPY Fundamentals

  • 15:00 US Pending Home Sales. Estimate 2.2%.
  • 23:50 Bank of Japan Monetary Policy Meeting Minutes.
  • 23:50 Japanese Corporate Services Price Index. Estimate 0.9%.

 

*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.