USD/JPY – Steady As Markets Eye US Inflation Data

The Japanese yen is showing little movement on Friday, as USD/JPY trades in the mid-101 line in the European session. The yen is red-hot, having added around 250 points at the expense of the struggling US dollar. In economic news, the BOJ minutes were a non-event, as policymakers said that the central bank’s quantitative and qualitative monetary easing would continue for the time being. The US wraps up the trading week with two key events on Friday – Producer Price Index and UoM Consumer Sentiment. In Japan, Corporate Goods Price Index met expectations.

Unemployment Claims looked sharp, as the key indicator dropped to 300 thousand last week. This beat the estimate of 314 thousand and marked the lowest reading since May 2007. With the Federal Reserve looking to continue tapering its QE scheme and speculation rising about a possible interest rate increase, every employment release is under the market microscope, as the job data is a crucial factor in what steps the Fed takes concerning QE and interest rate policy.

Wednesday’s release of the Federal Reserve minutes was eagerly anticipated, but the minutes did not shed light on the question of when the Fed might raise interest rates. Policymakers expressed concern about speculation over this issue, but didn’t say when the central bank might change its current monetary policy. The minutes were more dovish than expected, and the US dollar responded with losses.

The BOJ minutes did not make any waves on Thursday, as the central bank stated it was maintaining its current monetary policy, which involves the purchase of assets at an annual level of 60-70 trillion yen. Policymakers said that the outlook for the Japanese economy is positive and that monetary easing will continue until inflation reaches the 2% target. The government raised the sales tax last week, which will help reduce the country’s massive debt but is likely to slow down the economy. There is a strong likelihood that the Bank could introduce further easing in July, when the government is expected to introduce measures to stimulate the economy.

USD/JPY for Friday, April 11, 2014

USD/JPY April 11 at 10:35 GMT

USD/JPY 101.53 H: 101.86 L: 101.33

USD/JPY Technical

• USD/JPY has edged higher in Friday trading. The pair touched a low of 101.33 in the Asian session.
• On the upside, 102.53 has some breathing room as the pair trades at lower levels.
• 101.19 has weakened as a support level and could face pressure during the day. The key line of 100.00 is stronger.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.97.
• Above: 102.53, 103.30, 104.17, 105.70 and 106.85.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Friday, continuing the trend we have seen all week long. This is consistent with the movement of the pair, as the dollar has edged higher. The ratio is made up of a strong majority of long positions, indicating trader bias towards the dollar moving upwards.

The yen has taken a breather on Friday, after strong gains during the week. USD/JPY has edged lower early in the North American session.

USD/JPY Fundamentals

• 3:45 Japanese 30-year Bond Auction. Actual 1.70%.
• 12:30 US PPI. Estimate 0.1%.
• 12:30 US Core PPI. Estimate 0.2%.
• 13:55 US Preliminary UoM Consumer Sentiment. Estimate 81.2 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:30 US Natural Gas Storage. Estimate 15B.

*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.