USD/JPY – Dollar Firm on Strong US Housing Data

The US dollar has posted slight gains on Tuesday as USD/JPY trades in the high-102 range in the North American session. On the release front, US data was mixed. CPI and Core CPI posted weak gains of 0.1%, while Building Permits and Housing Starts improved in July and beat their estimates. In Japan, we’ll get a look at Trade Balance later in the day. The markets are expecting a smaller deficit in the July release.

US housing numbers were sharp on Tuesday. Building Permits improved to 1.05 million, beating the estimate of 1.00 million. Housing Starts jumped to 1.09 million, easily beating the estimate of 0.97 million. Meanwhile, inflation numbers in the US remain at very low levels. On Tuesday, CPI and Core CPI, the primary gauges of consumer inflation, both posted paltry gains of 0.1%.  These weak readings come on the heels of PPI, a manufacturing inflation index, which also came in at 0.1% last month. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy.

Financial leaders and central bankers from around the world will gather in Jackson Hole, Wyoming for a conference which starts on Friday. This will be Janet Yellen’s first appearance as Fed chair at the conference, and will undoubtedly be the star of the show. Yellen is expected to discuss the employment market rather than monetary policy, but the markets will be listening closely for any hints as to an interest rate hike.

 

USD/JPY for Tuesday, August 19, 2014

USD/JPY August 19 at 14:05 GMT

USD/JPY 102.77 H: 102.81 L: 102.52

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
100.00 101.19 102.53 103.07 104.17 105.44

 

  • USD/JPY was flat in the Asian session. The pair edged higher in European trade and is stable in the North American session.
  • On the downside, 102.53 is under strong pressure and could see further action during the day. 101.19 is stronger.
  • 103.07 is an immediate resistance line. 104.17 follows.
  • Current range: 102.53 to 103.07

Further levels in both directions:

  • Below: 102.53, 101.19, 100, 98.84 and 98.09
  • Above: 103.07, 104.17 and 105.44 and 107.68

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Tuesday. This is not consistent with the pair’s movement, as the dollar has posted slight gains. The ratio has a majority of long positions, indicating trader bias towards the dollar continuing its upward movement.

 

USD/JPY Fundamentals

  • 12:30 US Building Permits. Estimate 1.00M. Actual 1.05M.
  • 12:30 US CPI. Estimate 0.1%. Actual 0.1%.
  • 12:30 US Core CPI. Estimate 0.2%. Actual 0.1%.
  • 12:30 US Housing Starts. Estimate 0.97M. Actual 1.09M.
  • 23:50 Japanese Trade Balance. Estimate -0.77T.

*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.