USD/JPY – Yen Rally Continues After BoJ Statement

The Japanese yen continues to move higher on Tuesday, as USD/JPY is trading in the low-108 range in European session. The pair has gained about 150 points since the start of the week, erasing Friday’s sharp losses. On the release front, the BoJ did not introduce any new monetary easing measures. In the US, today’s highlight is JOLTS Job Openings, an important employment indicator. The markets are expecting a slight improvement in the September reading.

As expected, the BoJ did not make any changes to monetary policy in its policy statement on Tuesday. The central bank noted that the economy was recovering moderately, while acknowledging that domestic demand was down after the sales tax hike in April. Currently, the BoJ is increasing the monetary base at an annual pace of 60-70 trillion yen. With the yen trading close to six-year lows, the BoJ is unlikely to increase stimulus, as this would further weaken the yen.

US employment data sparkled on Friday, helping the US dollar post gains against the wobbly euro. Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong job numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later in 2015, and increased speculation about a rate move will likely boost the dollar even further.

USD/JPY for Tuesday, October 7, 2014

USD/JPY October 7 at 13:40 GMT

USD/JPY 108.23 H: 109.23 L: 108.11

USD/JPY Technical

• USD/JPY moved higher in the Asian session but then gave up these gains. The pair continued to lose ground in the European session and broke below support at 108.58. The yen has gained more ground early in the North American trade.
• 107.68 is the next support level.
• 108.58 has reverted to a resistance role as the yen trades at higher levels. 109.82 is stronger.
• Current range: 107.68 to 108.58

Further levels in both directions:

• Below: 107.68, 106.85, 105.44 and 104.68
• Above: 108.58, 109.82, 110.68, 112.48 and 113.68

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Tuesday. This is consistent with the pair’s movement, as the yen continues to pick up ground against the dollar. The ratio has a majority of short positions, indicative of trader bias towards the yen continuing this week’s rally.

USD/JPY Fundamentals

• 4:54 BoJ Monetary Policy Statement.
• 5:00 Japanese Leading Indicators. Estimate 1042%. Actual 104.0%.
• 6:32 BoJ Press Conference.
• 14:00 US JOLTS Job Openings. Estimate 4.71M.
• 14:00 US IBD/TIPP Economic Optimism. Estimate 46.3 points.
• 17:20 US FOMC Member Narayana Kocherlakota Speaks.
• 19:00 US FOMC Member William Dudley Speaks.
• 19:00 US Consumer Credit. Estimate 20.3B.

*Key releases are highlighted in bold

*All release times are GMT

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