USD/JPY: Steady as Markets Eye Key US Employment Data

USD/JPY is steady on Wednesday, as the pair trades in the mid-101 range late in the European session. On the release front, today’s highlight is the ADP Nonfarm Payrolls, which should be treated as a market-mover. As well, Federal Reserve chair Janet Yellen will address the IMF in Washington. There are no Japanese releases on Wednesday.

The Tankan indices are key indicators of the health of the Japanese economy, and the May data was disappointing. Tankan Manufacturing Index slipped to 12 points, a three-month low. The Tankan Non-Manufacturing Index dropped to 19 points, down from 24 points a month earlier. This reading matched the estimate. As well, Japanese Average Cash Earnings posted a respectable gain of 0.8%, matching the forecast.

Last week’s US GDP release for Q1 was a disaster, as the economy contracted by almost 3%. However, the markets remained calm, and the US dollar escaped without much damage against most of its major rivals. More recent releases have been better, notably consumer confidence and housing data. Pending Home Sales jumped 6.1%, crushing the estimate of 1.4%. This was the strongest gain since May 2013. This reading followed New Home Sales and Existing Home Sales, which both beat their estimates. The markets are keeping a close eye on ADP Nonfarm Payrolls, which is published prior to the official NFP release. The markets are expecting the indicator to improve to 207 thousand, compared to a gain of just 179 thousand a month earlier.

USD/JPY for Wednesday, July 2, 2014

USD/JPY July 2 at 11:15 GMT

USD/JPY 101.47 H: 101.65 L: 101.41

USD/JPY Technical

• USD/JPY has shown little movement in the Asian and European sessions.
• 102.53 remains a strong resistance line.
• 101.19 is an immediate support line. The next support level is the round number of 100, which has held firm since November.
• 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, 103.07, 104.17 and 105.70

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Wednesday trade. This is not consistent with the movement we’re seeing from the pair, as the yen has edged higher against the dollar. The ratio is made up of a large majority of long positions, indicating strong trader bias towards the dollar reversing direction and moving higher.

USD/JPY Fundamentals

• 11:30 US Challenger Job Cuts.
• 12:15 US ADP Nonfarm Employment Change. Estimate 207K.
• 14:00 US Factory Orders. Estimate -0.4%.
• 14:30 US Crude Oil Inventories. Estimate -2.2M.
• 15:00 US Fed Chair Janet Yellen Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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