USD/JPY: Steady as Japanese Manufacturing Numbers Improve

USD/JPY has edged higher on  Monday, as the pair trades in the mid-101 range late in the European session. It’s a quiet start to the week, with only one release on the schedule. Japanese Revised Industrial Production posted a gain in June beat the estimate. In the US, there are no releases on Monday.

The week started on the right foot in Japan, as Revised Industrial Production bounced back last month with a gain of 0.7%, beating the estimate of 0.5%. Late last week, Japanese manufacturing numbers was a mix. Core Machinery Orders plunged 19.5%, its third decline in four readings. The markets had expected a respectable gain of 0.9%. Tertiary Industry Activity bounced back from a sharp decline in May, posting a gain of 0.9%. However, the markets had expected a much stronger gain of 1.9%. There was good news on the inflation front, as the Corporate Goods Price Index continues its impressive upward trend in the second quarter. The index improved to 4.6%, edging past the estimate of 4.5%.

In the US, employment data continues to impress. Last week, Unemployment Claims dropped to 304 thousand, well below the estimate of 316 thousand. Employment numbers for June looked sharp, led by a jump in Nonfarm Payrolls and a drop in the unemployment rate. The strong employment numbers have increased speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be closely scrutinized as the markets look for clues as to the timing of any rate moves.

The Federal Reserve minutes did not shed much light on when the Fed plans to raise interest rates, but policymakers did agree to wind up the QE scheme by October. The asset purchase program flooded the economy with over $2 trillion, and the Fed has been steadily reducing the program since last December. Winding down QE, which currently stands at $45 billion/month, will require several more tapers by the Fed, but that shouldn’t pose a problem,given the solid employment data the economy has been churning out.

 

USD/JPY for Monday, July 14, 2014

USD/JPY July 14 at 12:35 GMT

USD/JPY 101.51 H: 101.54 L: 101.34

 

USD/JPY Technical

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

 

  • USD/JPY has been uneventful in the Asian and European sessions.
  • 102.53 is a strong resistance line.
  • 101.19 continues to provide weak resistance. There is stronger support at 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 on Monday. This is consistent with the movement we’re seeing from the pair, as the dollar has posted gains. The ratio is made up of a large majority of long positions, indicating strong trader bias towards the dollar continuing to move higher.

 

USD/JPY Fundamentals

  • 4:30 Japanese Revised Industrial Production. Estimate 0.5%. Actual 0.7%.

*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.