USD/JPY – Steady As Japanese Manufacturing Releases Slide

The Japanese yen continues to show little movement this week, as USD/JPY trades in the low-102 range in the European session. In economic news, Japanese manufacturing numbers disappointed, as Core Machinery Orders and Tertiary Industry Activity both posted declines. It’s a quiet day in the US, with just three releases. On Tuesday, Fed chair Janet Yellen testified before Congress and reiterated that the Fed plans to continue tapering QE. JOLT Job Openings, a key event, showed little change in January and fell short of the estimate.

Japanese manufacturing numbers looked weak on Wednesday. Core Machinery Orders declined by 15.7%, its sharpest drop in five years. This was much worse than the market estimate of -4.1%. Tertiary Industry Activity also disappointed, declining by 0.4%, its third drop in four releases. The estimate stood at -0.2%. These weak numbers will raise concern about the health of the Japanese manufacturing industry. There was a silver lining from Preliminary Machine Tool Orders, a minor indicator which posted a gain of 39.6%.

It hasn’t been a great week for Japanese releases. 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 and fell short of the estimate.

Fed chair Janet Yellen, who just started her new job on February 1, didn’t generate much excitement in her appearance before Congress on Tuesday. She said that the Fed plans to continue trimming QE, provided that the employment picture continues to improve and inflation rises. She acknowledged that even though the unemployment rate has improved steadily, the recovery in the labor market is far from complete. Meanwhile, JOLTS Job Openings, a key event, showed little change in January, with a reading of 3.99 million. This was short of the estimate of 4.04 million.

 

USD/JPY for Wednesday, February 12, 2014

Forex Rate Graph 21/1/13

USD/JPY February 12 at 13:05 GMT

USD/JPY 102.32 H: 102.61 L: 102.23

 

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 slight losses in Wednesday trade.
  • On the upside, 102.53 is under pressure. This is followed by stronger resistance at 103.30.
  • 101.19 is providing strong support. 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 pointing to gains in short positions in Wednesday trading. This is consistent with what we are seeing from the pair, as the yen has posted slight losses. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar posting gains against the yen.

It’s been a quiet week for USD/JPY, and the trend could continue on Wednesday. The pair is steady in the European session.

 

USD/JPY Fundamentals

  • 6:00 Japanese Preliminary Machine Tool Orders. Estimate 39.6%.
  • 15:00 US Crude Oil Inventories. Estimate 2.5M.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate -16.4B.

*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.