USD/JPY – Dollar Rally Continues as Greenback Shrugs Off Weak Jobless Claims

The US dollar has posted gains on Thursday, as USD/JPY trades in the high-107-range in the European session. The dollar has resumed its winning ways, gaining close to 200 points in the past week against the sagging yen. On the release front, Japanese Flash Manufacturing PMI climbed to 52.8 points. In the US, Unemployment Claims rose to 284 thousand, much higher than the previous reading of 264 thousand. However, the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low.

There is no arguing that recent US economic numbers have been solid, as the recovery continues to deepen. However, the persistent lack of inflation remains a serious concern, indicative of slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI rose 0.1%, an improvement from the previous reading of -0.2%. The estimate stood at 0.0%, so clearly the markets clearly did not have high expectations. It was a similar story from Core CPI, which also posted a 0.1%, up from 0.0% a month earlier. This was shy of the forecast of 0.2% but still within expectations.

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 Thursday, October 23, 2014

USD/JPY October 23 at 13:00 GMT

USD/JPY 107.87 H: 107.88 L: 107.10

USD/JPY Technical

• USD/JPY was flat in the Asian session but has posted strong gains in European trade, breaking above resistance at 107.68.
• 107.68 has reverted to a support level as the dollar shows strong gains. 106.85 is stronger.
• 108.58 is the next resistance line.
• Current range: 107.68 to 108.58

Further levels in both directions:

• Below: 107.68, 106.85, 105.44, 104.68 and 103.19
• Above: 108.58, 109.82, 110.68 and 112.24

OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in long positions on Thursday, continuing the trend seen a day earlier. This is consistent with the pair’s movement, as the dollar has posted strong gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar continuing to move higher.

USD/JPY Fundamentals

• 1:35 Japanese Flash Manufacturing PMI. Estimate 52.1 points. Actual 52.8 points.
• 12:30 US Unemployment Claims. Estimate 269K. Actual 283K.
• 13:00 US HPI. Estimate 0.4%. Actual 0.5%.
• 13:45 US Flash Manufacturing PMI. Estimate 57.2 points.
• 14:00 US Consumer Confidence. Estimate -12 points.
• 14:00 US CB Leading Index. Estimate 0.8%
• 14:30 US Natural Gas Storage. Estimate 97B.

*Key releases are highlighted in bold

*All release times are GMT

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