USD/JPY – Calm as Markets Await Yellen Speech

USD/JPY continues to trade at high levels on Friday, as the pair trades in the high-103 range early in the North American session. The yen has not looked good at all this week, having lost about 130 points to the US dollar. There are no Japanese or US releases on Friday. The markets will be closely monitoring the symposium in Jackson Hole, Wyoming, with Federal Reserve Chair Janet Yellen addressing the meeting later in the day.

Financial leaders and central bankers from around the world have gathered in picturesque Jackson Hole, Wyoming. This is Janet Yellen’s first appearance as Fed chair at the conference and she will deliver a keynote speech on Friday. There is speculation that Jackson Hole could be a currency event, which would be a marked departure from the conference’s usual focus on the US labor market and monetary policy. If this is the case, we could see a sharp reaction from the currency markets. Traders should therefore be prepared for some movement from USD/JPY during the day.

US releases wrapped up the week on a high note. Unemployment Claims improved to 298 thousand, lower than the estimate of 302 thousand. The key indicator has now beaten the estimate in six of the past seven readings. Thursday’s other key event, the Philly Fed Manufacturing Index, shot higher in July, rising to 28.0 points. The markets had expected the indicator to slip to 19.7 points. There was more good news on the housing front, as Existing Home Sales improved to 5.15 million, well above the estimate of 5.01 million. This marked the highest level we’ve since September 2013. What is particularly encouraging is that the data stems from a wide range of sectors, which points to balanced economic growth.

The Federal Reserve released its policy meeting minutes on Wednesday. The minutes were hawkish in tone, with the Fed saying that an interest rate hike could come sooner rather than later if employment numbers continue to improve. The Fed said that the economy continues to improve, but the QE program, which is scheduled to wind up in October, will not be accelerated. Once the asset purchase scheme is terminated, the guessing game regarding the timing of a rate hike will only intensify. Will Janet Yellen provide some clues when she speaks in Jackson Hole?

USD/JPY for Friday, August 22, 2014

USD/JPY August 22 at 13:25 GMT

USD/JPY 103.75 H: 103.95 L: 103.50

USD/JPY Technical

• USD/JPY edged lower in the Asian session, but has shown almost no movement in the European and North American sessions.
• 103.07 is providing support.
• 104.17 is an immediate resistance line. It has held firm since January.
• Current range: 103.07 to 104.17

Further levels in both directions:

• Below: 103.07, 102.53, 101.19 and 100
• Above: 104.17, 105.44, 107.68 and 108.57

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Friday, continuing the trend which has marked the ratio throughout  the week. This is not consistent with the pair’s movement, as the yen has posted small gains. The ratio has a majority of short positions, indicating trader bias towards the yen gaining ground.

USD/JPY Fundamentals

• Day 2 – Jackson Hole Symposium.
• 14:00 US Federal Reserve Chair Janet Yellen Speaks at Jackson Hole.

*Key releases are highlighted in bold

*All release times are GMT

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