USD/JPY – Steady as Markets Eye Japanese Consumer Spending Data

USD/JPY is calm on Monday, as the pair continues to trade in the high-101 range late in the European session. Today’s highlight is US Pending Home Sales, with the markets braced for a decline in the June release. Over in Japan, consumer spending is in the spotlight, with the release of Household Spending and Retail Sales later in the day. Both indicators have posted two straight declines, and the downward trend is expected to continue. We could see some gains by the yen if either release exceeds expectations.

The US ended the week on a high note, courtesy of strong data from the manufacturing sector. Core Durable Goods Orders jumped 0.8%, beating the estimate of 0.6%, and rebounding nicely from a decline of 0.1% in May. Durable Goods Orders followed suit, posting a gain of 0.7%, compared to a weak reading of -1.0% last month. This easily surpassed the estimate of 0.4%. Unemployment Claims tumbled last week, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, which has helped the dollar. As well, positive news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.

In Japan, there was good news last week from inflation indicators. Tokyo Core CPI led the way with a gain of 2.8%, edging above the estimate of 2.7%. National Core CPI and the Corporate Services Price Index looked strong, as both posted gains above 3%. The fight against inflation, a major component of the country’s monetary policy, has become a success story for the government and Bank of Japan., Deflation has been wiped out after hobbling the economy for some 15 years, and inflation levels continue to rise.

 

USD/JPY for Monday, July 28, 2014

USD/JPY July 28 at 11:45 GMT

USD/JPY 101.75 H: 101.84 L: 101.75

 

USD/JPY Technical

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

 

  • USD/JPY has shown little movement in the Asian or European sessions. The pair touched a high of 101.91 early in European trading.
  • 102.53 continues to provide resistance.
  • 101.19 is providing support .
  • 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 Monday trade. This is consistent with the lack of movement shown by the pair . The ratio is made up of a large majority of long positions, indicating strong trader bias towards the dollar breaking out and moving to higher ground.

 

USD/JPY Fundamentals

  • 13:45 US Flash Services PMI. Estimate 62.3 points.
  • 14:00 US Pending Home Sales. Estimate -0.2%.
  • 23:30 Japanese Household Spending. Estimate -3.7%.
  • 23:30 Japanese Unemployment Rate. Estimate +3.5%.
  • 23:50 Japanese Retail Sales. Estimate -0.4%.

* 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.