USD/JPY – Slight Losses Ahead of US Trade Data

The Japanese yen has posted slight gains on Wednesday, as the pair trades in the mid-102 range late in the European session. It’s a quiet day on the release front, highlighted by Trade Balance. In  Japan, there was only one release on the schedule, as Leading Indicators matched the forecast.

US PMIs continue to point upwards, indicative of an improving US economy. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news out of the US on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has resulted in gains for the US dollar against its major rivals.

Japanese data struggled last week, as Housing Starts posted its fourth straight decline and Preliminary Industrial Production, tumbled 3.3% in June. This was the indicator’s sharpest decline since June 2013. There was no relief from Household Spending and Retail Sales, as both consumer spending indicators posted a third straight decline. 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 USD/JPY, which continues to trade at high-levels.

 

USD/JPY for Wednesday, August 6, 2014

USD/JPY August 6 at 12:25 GMT

USD/JPY 102.34 H: 102.62 L: 102.30

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
98.84 100.00 101.19 102.53 103.07 104.17

 

  • USD/JPY was stable for most of the Asian session, edging lower late in the session. This downward movement has continued in European trading, as the dollar remains under pressure.
  • On the downside, 101.19 is a strong support level.
  • 102.53 has reverted to a resistance role as the pair trades at lower levels. 103.07 is stronger.
  • Current range: 102.53 to 103.07

Further levels in both directions:

  • Below: 101.19, 100, 98.84 and 98.09
  • Above: 102.53, 103.07, 104.17 and 105.7

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Wednesday. This is not consistent with the movement we’re seeing from the pair, as the yen has posted gains against the dollar. The ratio continues to have a majority of long positions, indicating strong trader bias towards the dollar reversing directions and moving to higher ground.

USD/JPY Fundamentals

  • 5:00 Japanese Leading Indicators. Estimate 105.5%. Actual 105.5%.
  • 12:30 US Trade Balance. Estimate -44.2B.
  • 14:30 US Crude Oil Inventories. Estimate -1.1M.

* 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.