USD/JPY – Steady As US Manufacturing PMI Improves

The Japanese yen is steady in Monday trading, as the pair trades in the mid-101 range. The yen wrapped up a strong week, gaining about 100 points against the US dollar. In economic news, Japanese Capital Spending posted a strong gain but fell short of the estimate. On Monday, Japan will release Monetary Base. In the US, today’s key event, ISM Manufacturing PMI, improved in January and beat the estimate.

After a less than stellar week, US releases started the new trading week on a positive note. ISM Manufacturing PMI improved to 53.2 points in January, beating the estimate of 52.3. On Friday, Pending Home Sales posted a paltry gain of 0.1%, well below the estimate of a 2.9% gain. However, the reading was a strong improvement over the January reading of -8.7%. Earlier in the week, Unemployment Claims came in above the estimate and GDP also missed the forecast. Although market sentiment remains positive about the US economy, recent key releases have not impressed, and the dollar will find itself under pressure this week if US numbers don’t show improvement.

Japanese Capital Spending sported a strong gain of 4.0%, which was an eight-month high. However, the markets were looking for more, with an estimate of 5.1%. This follows some positive news late last week. Tokyo Core CPI continues to rise and posted a respectable gain of 0.9%, edging above the estimate. Household Spending climbed 1.1% while Retail Sales jumped 4.4%, as both easily beat their estimates. Not to be outdone, Preliminary Industrial Production shot up 4.0%, its best showing since May 2011.

Federal Reserve Chair Janet Yellen testified on Thursday before a Senate committee. As expected, Yellen said that the Fed remains committed to tapering QE and would like to wind up the bond-buying scheme by the fall. At the same time, she acknowledged the string of weak US releases recently and said that the Fed would closely monitor to what extent the weak numbers are due to cold weather and what portion can be attributed to a “softer outlook”. The next Fed policy meeting takes place in mid-March and the markets will be expecting another $10 billion cut to QE.

USD/JPY for Monday, March 3, 2014

USD/JPY March 3 at 16:00 GMT

USD/JPY 101.44 H: 101.55 L: 101.20

USD/JPY Technical

• USD/JPY is steady in Monday trade.
• 102.53 is the first resistance line. There is stronger resistance at 103.30.
• 101.19 is providing support. This line has weakened following strong gains by the yen last week, and could face pressure. 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 last week. This consistent with what we are seeing from the pair, which is showing little movement. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar pushing higher against the yen.

The yen is steady in Monday trading, and USD/JPY has edged lower in North American trading.

USD/JPY Fundamentals

• 23:50 Japanese Monetary Base. Estimate 54.2%.
• 14:00 US Final Manufacturing PMI. Estimate 56.7 points. Actual 57.1 points.
• 15:00 US ISM Manufacturing PMI. Estimate 52.3 points. Actual 53.2 points.
• 15:00 US Construction Spending. Estimate 0.0%.  Actual 0.1%.
• 15:00 US ISM Manufacturing Prices. Estimate 57.2 points. Actual 60.0 points.
• All Day – US Total Vehicle Sales. Estimate 15.3M.
• 23:50 Japanese Monetary Base. Estimate 54.2%.

*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.