USD/JPY – Yen Higher After Solid Tankan Data

USD/JPY has posted losses in Monday trading, as the pair trades close to the 103 line. In economic news, Japanese Tankan Indexes looked solid, as both beat their estimates. There are no releases out of Japan on Monday. Over in the US, today’s highlights include the Empire State Manufacturing Index and Industrial Production.  

Japanese releases started the week on a positive note, as the important Tankan indexes impressed.  The Tankan Manufacturing Index jumped to 16 points, up from 12 points the month before. This edged above the estimate of 15 points. The news was particularly welcome, as recent Japanese manufacturing releases have not impressed. The Tankan Non-Manufacturing Index did even better, improving from 14 to 20 points, well above the estimate of 16 points. Both indicators registered their best numbers since 2007. The strong numbers could boost the struggling yen further against the dollar.

There was some good news on the fiscal front, as the US House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate next week, will remove the risk of a government shutdown and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

US employment numbers have generally been solid recently, although last week’s disappointed, posting a nine-week high.  The Fed has said that a stronger employment picture is a prerequisite to tapering, and there is speculation that the Fed could make a move this week, although there’s a greater likelihood that we won’t see a taper until early next year. Still, the Fed policy meeting is the event of the week and will be closely monitored by the markets. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies.

 

USD/JPY for Monday, December 16, 2013

Forex Rate Graph 21/1/13

USD/JPY December 16 at 13:05 GMT

USD/JPY 102.94 H: 103.27 L: 102.64

 

USD/JPY Technical

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

 

  • USD/JPY has lost ground in Monday trading. The pair has been trading close to the 103 line in the European session.
  • 103.30 has reverted to resistance role. This is a weak line which could face pressure if the US dollar reverses directions and moves higher. The next resistance line is at 104.17, which has remained intact since October 2008.
  • On the downside, 102.53 is providing support. This is followed by a support level at 101.19.
  • Current range: 102.53 to 103.30

 

Further levels in both directions:

  • Below: 102.53, 101.19, 100.00 and 98.92
  • Above: 103.30, 104.17, 105.70, 106.85 and 107.73

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Monday. This is not reflected in the pair, as the yen has gained ground against the dollar. The ratio continues to be made up of a majority of long positions, reflecting a trader bias towards the dollar reversing directions and moving higher.

The pair is trading close to the 103 line in Monday trading. With no major releases out of the US on Monday, we may not see much movement from the pair during the North American session.

 

USD/JPY Fundamentals

  • 13:30 US Empire State Manufacturing Index. Estimate 4.9 points.
  • 13:30 US Revised Nonfarm Productivity. Estimate 2.9%.
  • 13:30 US Revised Unit Labor Costs. Estimate -1.5%.
  • 14:00 US Flash Manufacturing PMI. Estimate 54.9 points.
  • 14:00 US TIC Long-Term Purchases. Estimate 31.4B.
  • 14:15 US Capacity Utilization Rate. Estimate 78.5%.
  • 14:15 US Industrial Production. Estimate 0.6%.

 

*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.