USD/JPY – Dollar Hits Six-Week Highs on Dismal Japanese Data

USD/JPY continues to post gains on Wednesday, as the pair has climbed to the low-102 range. The yen has been struggling, and has surrendered about 100 points in just over a week. On the release front, it’s a busy day, with three key events out of the US – Advance GDP, ADP Nonfarm Payrolls and the Federal Reserve Policy Statement. We could see some strong movement in the markets following these releases. In Japan, Preliminary Industrial Production disappointed on Wednesday, posting a 3.3% decline. There are no Japanese releases on Thursday.

Japanese data continues to struggle this week. Preliminary Industrial Production, an important manufacturing release, posted a sharp drop of 3.3% in June, worse than the forecast of a 1.0% decline. This was the sharpest decline since June 2013. This follows dismal news on Tuesday, as consumers continue to keep a tight grip on the purse strings. Household Spending declined by 3.0%, the third straight drop. The figure did, however, beat the estimate of -3.7%. Retail Sales, the primary gauge of consumer spending, posted a decline of -0.6%, worse than the estimate of -0.4%. This was also a third straight decline. As well, Unemployment Rate rose to 3.7%, above the estimate of 3.5% and the highest level recorded since January. These figures point to trouble in the economy, as a decrease in consumer spending will likely translate into weaker economic growth and put more pressure on the struggling Japanese yen.

CB Consumer Confidence was outstanding in June. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator’s highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth. The strong reading has helped the dollar posts gains against the retreating yen.

 

USD/JPY for Wednesday, July 30, 2014

USD/JPY July 30 at 12:05 GMT

USD/JPY 102.26 H: 102.28 L: 101.07

 

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 edging higher since late in the Asian session.
  • 102.53 has weakened and is an immediate resistance line.
  • 101.19 continues to provide strong 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 pointing to gains in short positions in Wednesday trade, continuing the trend we saw a day earlier. This is not consistent with the movement the pair, as the dollar continues to post gains. The ratio is made up of a large majority of long positions, indicating strong trader bias towards the dollar continuing to move to higher ground.

 

USD/JPY Fundamentals

  • 12:15 US ADP Nonfarm Employment Change. Estimate 234K.
  • 12:30 US Advance GDP. Estimate 3.1%.
  • 12:30 US Advance GDP Price Index. Estimate 1.8%.
  • 14:30 US Crude Oil Inventories. Estimate -0.5M.
  • 18:00 US FOMC Policy Statement.
  • 18:00 US Federal Funds Rate. <0.25%.

* 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.