USD/JPY – Little Movement as Japanese Trade Balance Slips

The Japanese yen is showing little activity on Wednesday, as USD/JPY trades just below the 107-range in the European session. In Japan, Trade Balance disappointed on Tuesday, posting a larger deficit than expected. There are no Japanese releases on Wednesday. Over in the US, today’s highlights are CPI and Core CPI. The markets are keeping expectations low for the September readings.

Although US economic numbers have been strong overall, the lack of inflation remains a serious concern. Last week, PPI slipped to -0.1%, its first decline in four months. We’ll get a look at consumer inflation numbers on Wednesday, with the release of Core CPI and CPI. Soft figures would be an indication of weak consumer demand, which could hamper the US recovery.

On Monday, BoJ Governor Haruhiko Kuroda stated that Japan’s economy continues to improve modestly, although consumer demand has lessened since the consumption tax hike in April. The BoJ would prefer to stay on the sidelines, but there has been talk that the central bank could step in with additional stimulus if the economy takes a turn for the worse. Such a move would weigh on the already weak Japanese yen.

USD/JPY for Wednesday, October 22, 2014

USD/JPY October 22 at 11:45 GMT

USD/JPY 106.94 H: 107.07 L: 106.79

USD/JPY Technical

• USD/JPY has been flat in the Asian and European sessions, as the pair trades close to the 106.85 line.
• 107.68 is the next line of resistance.
• Current range: 106.85 to 107.68

Further levels in both directions:

• Below: 106.85, 105.44, 104.68, 103.19 and 102.13
• Above: 107.68, 108.58, 109.82 and 110.68

OANDA’s Open Positions Ratio

USD/JPY ratio is showing slight gains in long positions on Wednesday. This is not consistent with the pair’s movement, as the yen is almost unchanged. The ratio has a majority of long positions, indicative of trader bias towards the dollar breaking out and moving higher.

USD/JPY Fundamentals

• 12:30 US CPI. Estimate 0.0%.
• 12:30 US Core CPI. Estimate 0.2%.
• 14:30 US Crude Oil Inventories. Estimate 2.8M.

*Key releases are highlighted in bold

*All release times are GMT

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