USD/JPY – Yen Stable as Japanese Economy Contracts in Q2

The yen has started the week above the 105 line, as USD/JPY trades around 105.20 in Monday’s European session. In Japan, GDP came in at -1.8% in Q2, matching the forecast. On Monday, the BoJ will release its monetary policy meeting minutes and we’ll get a look at Tertiary Industry Activity. There are no major US releases on Monday.

Japanese GDP was anything but impressive in Q2, posting a decline of 1.6%. This marked the first quarter that the economy has contracted since Q3 of 2012. The sales tax hike in April, which has taken a bite out of economic growth, continued to take its toll in the second quarter as retail sales and household spending has softened. The government signaled last week that it is prepared to increase stimulus to help the economy absorb another sales tax hike in October. Further stimulus could send the sagging yen to even lower levels.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

 

USD/JPY for Monday, September 8, 2014

USD/JPY September 8 at 11:05 GMT

USD/JPY 105.21 H: 105.22 L: 104.99

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
102.53 103.07 104.17 105.44 106.85 107.68

 

  • USD/JPY edged lower in the Asian session but then changed directions and continues to edge higher in European trade.
  • 104.17 has strengthened as the pair trades above the 105 line.
  • 105.44 is an immediate resistance line. Will the pair break above this level? There is stronger resistance at 106.85.
  • Current range: 104.17 to 105.44

Further levels in both directions:

  • Below: 104.17, 103.07, 102.53 and 101.19
  • Above: 105.44, 106.85, 107.68 and 108.57

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Monday. This is consistent with the pair’s current movement, as the yen has posted small gains. The ratio has a majority of short positions, indicative of trader bias towards the yen posting gains.

 

USD/JPY Fundamentals

  • 5:00 Japanese Economy Watchers Sentiment. Estimate 52.4 points. Actual 47.4 points.
  • 12:45 US Treasury Secretary Jack Lew Speaks.
  • 19:00 US Consumer Credit. Estimate 17.4B.
  • 23:50 BoJ Monetary Policy Meeting Minutes.
  • 23:50 Japanese Tertiary Industry Activity. Estimate 0.3%.
  • 23:50 Japanese M2 Money Stock. Actual 2.9%.

*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.