USD/JPY – Yen Steady Despite Weak Japanese Mfg. Data

USD/JPY continues to trade above the 103 line in Tuesday trading. The yen is not getting any help from Japanese releases, which have looked dismal this week. On Monday, BSI Manufacturing Index and Tertiary Industry Activity both came in well below market expectations. Core Machinery Orders, another major manufacturing indicator, will be released later on Tuesday. In the US, there are just three releases on the schedule, highlighted by JOLT Job Openings.

This week’s Japanese releases continue to disappoint. BSI Manufacturing Index tumbled to 9.7 points in November, down from 15.2 points the month before. This was way off the estimate of 17.2 points. Tertiary Industry Activity dropped by 0.7%, its fourth decline in five releases. The estimate stood at a 0.2% gain. A pair of minor releases on Tuesday brought mixed news. Consumer confidence rose to 42.5 points but this was shy of the forecast of 44.2. Preliminary Machine Tool Orders jumped 15.4%, its sharpest gain in almost two years. The Japanese yen has stayed steady despite these poor numbers, but further weak releases could send the currency downwards.

In the US, employment numbers continue to impress last week. After another strong Unemployment Claims release, Non-Farm Payrolls was almost unchanged, coming in at 203 thousand. This was well above the estimate of 180 thousand. The Unemployment Rate dropped from 7.3% to 7.0%, beating the estimate of 7.2%. The strong numbers are sure to increase the pressure on the Fed to taper QE when its meets later in December. The Fed has said that a stronger employment picture is a prerequisite to tapering, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting.

 

USD/JPY for Tuesday, December 10, 2013

Forex Rate Graph 21/1/13

USD/JPY December 10 at 11:50 GMT

USD/JPY 103.07 H: 103.39 L: 103.03

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
100.00 101.19 102.53 103.30 104.17 105.70

 

  • USD/JPY has edged lower in Tuesday trading but remains above the 103 line.
  • 102.53 continues to provide support. This is followed by a support line at 101.19.
  • 103.30 is providing resistance. This is a weak line which could face strong pressure if the dollar resumes its upward movement. This is followed by resistance at 104.17, which has remained intact since October 2008.
  • Current range: 102.53 to 103.30

 

Further levels in both directions:

  • Below: 102.53, 101.19, 100.00, 98.92 and 98.15
  • Above: 103.30, 104.17, 105.70 and 106.85

 

OANDA’s Open Positions Ratio

USD/JPY ratio has pointed to gains in short positions in Tuesday trading. This is reflected in the pair, which has edged lower. The ratio continues to be made up of a majority of long positions, reflecting a trader bias towards the dollar posting gains against the yen.

The pair continues to trade above the 103 line and has not reacted to weak Japanese data on Tuesday. The US will release more employment data on Tuesday, and we could see some volatility from USD/JPY in the North American session if the reading is not in line with market expectations.

 

USD/JPY Fundamentals

  • 3:45 Japanese 30-year Bond Auction. Actual 1.70%.
  • 5:00 Japanese Consumer Confidence. Estimate 44.2 points. Actual 42.5 points.
  • 6:00 Japanese Preliminary Machine Tool Orders. Actual 15.4%.
  • 12:30 US NFIB Small Business Index. Estimate 92.7 points.
  • 15:00 US JOLTS Openings. Estimate 3.96M.
  • 15:00 US Wholesale Inventories. Estimate 0.3%.
  • 23:50 Japanese Core Machinery Orders. Estimate 0.9%.
  • 23:50 Japanese Corporate Goods Price Index. Estimate 2.7%.

 

*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.