USD/JPY – Steady as Markets Eye US Key Numbers

The Japanese yen is stable on Wednesday, as USD/JPY trades just above the 107 line in the European session. The yen has rebounded strongly in the past week, gaining about 250 points against the US dollar. In economic news, Japanese Revised Industrial Production slumped in August, posting a decline of 1.9%. In the US, we’ll get a look at US releases after a quiet start to the week. There are three key events on the calendar – Retail Sales, Core Retail Sales and PPI.

US markets were off on Monday for a holiday, so there’s been little action on the release front so far this week. That could change later on Wednesday, as the US releases key consumer spending and inflation data. The markets are keeping low expectations, so traders should be prepared for some movement from the pair if there are some unexpected readings from Wednesday’s releases.

The US dollar has looked sharp recently, and pushed above the 110 line earlier this month. However, the impressive rally was interrupted by last week’s FOMC minutes, which were unexpectedly dovish. In the minutes, the Fed poured some cold water on rising expectations of a rate hike, as a number of policymakers said that the Federal Reserve should take a more data-dependent approach regarding a rate hike. The Fed also voiced concern about the rising strength of the US dollar which could weigh on the recovery. On the weekend, FOMC member Stanley Fischer said that the Fed could slow tightening if global growth is weaker than expected. Strong US numbers have raised expectations about a rate hike, but clearly the Fed is taking a cautious approach regarding the timing of a rate hike. Still, with QE set to wind up by the end of the month, rising speculation about higher rates bodes well for the US dollar.

USD/JPY for Wednesday, October 15, 2014

USD/JPY October 15 at 8:55 GMT

USD/JPY 107.11 H: 107.49 L: 107.05

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
104.68 105.44 106.85 107.68 108.58 109.82

 

  • USD/JPY has been marked by choppy trading in the Asian and European sessions.
  • On the downside, 106.85 is a weak support line. 105.44 is stronger.
  • 107.68 is the next resistance line.
  • Current range: 106.85 to 107.68

Further levels in both directions:

  • Below: 106.85, 105.44, 104.68 and 103.19
  • Above: 107.68, 108.58, 109.82, 110.68 and 112.48

 

OANDA’s Open Positions Ratio

USD/JPY ratio is showing little movement on Wednesday. This is consistent with the lack of movement we’re seeing from the pair. The ratio has a slight majority of short positions, indicative of trader bias towards the yen resuming its rally against the dollar.

 

USD/JPY Fundamentals

  • 4:30 Japanese Revised Industrial Production. Estimate -1.5%. Actual -1.9%.
  • 12:30 US Core Retail Sales. Estimate 0.2%.
  • 12:30 US PPI. Estimate 0.1%.
  • 12:30 US Retail Sales. Estimate -0.1%.
  • 12:30 US Core PPI. Estimate 0.1%.
  • 12:30 US Empire State Manufacturing Index. Estimate 20.3 points.
  • 14:00 US Business Inventories. Estimate 0.4%.
  • 18:00 US Beige Book.
  • 18:00 US Federal Budget Balance. Estimate 82.3B.

*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.