USD/JPY – Rangebound In Thin Holiday Trade

The Japanese yen is flat on Monday, as USD/JPY trades slightly above the 107 line. The Japanese markets are closed for a holiday. In the US, Empire State Manufacturing Index jumped to 27.5 points in August, well above expectations.

US numbers wrapped up last week on a high note. Core Retail Sales improved to 0.3%, edging above the estimate of 0.2%. Retail Sales posted a nice gain of 0.6%, well above the estimate of 0.3%. There was excellent news from the UoM Consumer Sentiment, which bounced back from a weak reading in July and improved to 84.6 points, its best showing since November 2012. The forecast stood at 83.2 points. These indicators point to an increase in consumer confidence and spending, which underscore a deepening economic recovery.

US employment data disappointed on Thursday. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE later this week, but a soft labor market could postpone plans to raise interest rates by mid-2015..

In Japan, BSI Manufacturing Index provided some positive news from the manufacturing sector, which has struggled. The index bounced back from a reading of -13.9 points in Q1, rising to 12.7 points in Q2. This surprised the markets, which had expected the indicator to fall to -10.3 points. With zero separating contraction from expansion, the indicator points to surprisingly strong optimism from large Japanese manufacturers. Earlier in the week, Core Machinery Orders came in at 3.5%, sharply down from 8.8% in the previous release. This followed a weak reading from Tertiary Industry Activity, which posted a flat reading of 0.0%.

USD/JPY for Monday, September 15, 2014

USD/JPY September 15 at 13:20 GMT

USD/JPY 107.06 H: 107.37 L: 107.06

USD/JPY Technical

• USD/JPY has showed very little movement in the Asian or European sessions.
• 106.85 has reverted to a support role as the yen trades in 107 territory. The next support level is 105.44.
• 107.68 is an immediate resistance line.
• Current range: 106.85 to 107.68

Further levels in both directions:

• Below: 106.85, 105.44, 104.17, 103.07 and 102.53
• Above: 107.68, 108.57, 109.82 and 110.68

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short 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 continuing to improve.

USD/JPY Fundamentals

• 12:30 US Empire State Manufacturing Index. Estimate 16.4 points. Actual 27.5 points.
• 13:15 US Capacity Utilization Rate. Estimate 79.3%.
• 13:15 US Industrial Production. Estimate 0.4%.

*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.