USD/JPY – Yen Improves Despite Weak Current Account

The Japanese yen has posted modest gains on Monday, as USD/JPY trades slightly above the 102 line in the European session. Japanese releases have not looked sharp as we start the new trading week. Current Account slid to a four-month low, while Consumer Confidence weakened in January and fell short of the estimate. On Friday, US Non-Farm Payrolls disappointed, but the Unemployment Rate dropped. There are no US releases on Monday.

The yen is pointing upwards despite some disappointing releases out of Japan. The current account deficit grew to -0.20 trillion yen, higher than the estimate of -0.06 trillion. Current Account is closely linked to currency demand, and a higher deficit means reduced purchases of yen by foreigners for Japanese goods and services. Consumer Confidence weakened for a second straight month and dropped to 40.5 points, well off the estimate of 43.9 points. This was the indicator’s lowest level since December 2012. Economy Watchers Sentiment also dropped in January, while Bank Lending matched the forecast.

In the US, the markets were treated to another dismal Nonfarm Payrolls release on Friday. The key employment indicator improved to 113 thousand in January, but this was well of the estimate of 185 thousand. The fact that the yen failed to gain ground after the poor NFP release attests to the high regard the markets have for the strength of the US economy. There was some good news as well on the US employment front, as the Unemployment Rate dipped to 6.6%, its lowest level in over five years.

 

USD/JPY for Monday, February 10, 2014

Forex Rate Graph 21/1/13

USD/JPY February 10 at 12:05 GMT

USD/JPY 102.14 H: 102.53 L: 102.07

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.30 104.17

 

  • USD/JPY has posted modest gains in Monday trading as it trades slightly above the 102 line.
  • The pair is facing resistance at 102.53. There is stronger resistance at 103.30.
  • On the downside, 101.19 has some breathing room as the pair trades above the 102 line. Next is the key level of 100.00, which has remained intact since November.
  • Current range: 101.19 to 102.53

 

Further levels in both directions:

  • Below: 101.19, 100.00, 99.57 and 98.65
  • Above: 102.53, 103.30, 104.17, 105.70, 106.85

 

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Monday trading, continuing the trend we saw for much of last week. This is not consistent with what we are seeing from the pair, as the yen has posted gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar moving to higher ground.

The yen started the week with modest gains in the Asian session. USD/JPY is very quiet in European trading.

USD/JPY Fundamentals

  • 5:00 Japanese Consumer Confidence. Estimate 43.9 points. Actual 40.5 points.
  • 6:00 Japanese Economy Watchers Sentiment. Estimate 55.5 points. Actual 54.7 points.

 

*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.