USD/JPY – Yen Stable Ahead of Japanese Retail Sales

The US dollar has posted slight gains on Monday, as USD/JPY trades slightly short of the 108 line. Taking a look at today’s events, the US will release Pending Home Sales. The markets are expecting a strong improvement, with an estimate of 1.1%. Japan will release Retail Sales, an important gauge of consumer spending. The forecast stands at 0.9%.

On Sunday, the Japanese Services Producer Price Index posted a strong gain of 3.5%, matching the forecast. With deflation eliminated, the next challenge for the government and the BoJ is boosting economic growth. We’ll get a look at consumer numbers during the week, with Retail Sales on Monday and Household Spending on Thursday.

In the US, last week’s jobless numbers were softer than expected. Unemployment Claims rose to 284 thousand, much higher than the previous reading of 264 thousand, and above the estimate of 269 thousand. However, the markets were not overly concerned, as the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low. Meanwhile, weak inflation levels continue to point to slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI and Core CPI both posted small gains of 0.1%.

USD/JPY for Monday, October 27, 2014

USD/JPY October 27 at 13:00 GMT

USD/JPY 107.77 H: 108.19 L: 107.74

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
105.44 106.85 107.68 108.58 109.82 110.68

 

  • USD/JPY has posted modest losses in the Asian and European sessions, putting pressure on support at 107.68.
  • 107.68 has weakened and is providing weak support. 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 unchanged on Monday. This is not consistent with the pair’s movement, as the dollar has posted modest losses. The ratio has a majority of long positions, indicative of trader bias towards the dollar reversing direction moving higher.

 

USD/JPY Fundamentals

  • 13:45 US Flash Services PMI. Estimate 57.9 points.
  • 14:00 US Pending Home Sales. Estimate 1.1%.
  • 23:50 Japanese Retail Sales. Estimate 0.9%.

*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.