USD/JPY: Yen Strengthens Ahead of FOMC Minutes

USD/JPY continues to post losses on Tuesday, as the pair trades in the mid-101 range late in the North American session. There are no major releases on today’s schedule. In Japan, Economy Watchers Sentiment fell short of the estimate. Later in the day, we’ll get a look at M2 Money Stock. In the US, the NFIB Small Business Index softened in June. Today’s highlight is JOLTS Job Openings, with the markets expecting a strong reading.

US employment numbers impressed last week, led by Nonfarm Payrolls and the Unemployment Rate sparkled. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and the FOMC minutes release on Wednesday will be under the market microscope.

The Tankan indices are key indicators of the health of the Japanese manufacturing and services sectors, and highly anticipated by the markets. The May data was disappointing, as both indices softened. Tankan Manufacturing Index slipped to 12 points, a three-month low. This was well short of the estimate of 16 points. The Tankan Non-Manufacturing Index dropped to 19 points, down from 24 points a month earlier. On a positive note, this matched the estimate.

 

USD/JPY for Tuesday, July 8, 2014

USD/JPY July 8 at 13:05 GMT

USD/JPY 101.64 H: 101.86 L: 101.62

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.07 104.17

 

  • USD/JPY showed little movement in the Asian session. The pair has edged lower in the European session.
  • 102.53 is the next line of resistance. 103.07 is stronger.
  • 101.19 is providing support. 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 pointing to gains in long positions, continuing the trend we saw a day earlier. This is not consistent with the movement we’re seeing from the pair, as the yen continues to post gains. 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

  • 5:00 Japanese Economy Watchers Sentiment. Estimate 49.2 points. Actual 47.7 points.
  • 11:30 NFIB Small Business Index. Estimate 97.3 points. Actual 95.0 points.
  • 14:00 US JOLTS Job Openings. Estimate 4.53M.
  • 17:45 FOMC Member Narayana Kocherlakota Speaks.
  • 19:00 US Consumer Credit. Estimate 21.3B.

*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.