USD/JPY – Yen Steady as Japanese Retail Sales Sparkles, US Durables Slide

USD/JPY is stable on Tuesday, as the pair trades just shy of the 108 line in the European session. On the release front, Japanese Retail Sales surprised with a strong gain of 2.6%. Later in the day, we’ll get a look at Japanese Preliminary Industrial Production. After a decline in August, the markets are expecting a gain of 2.6% in the upcoming release. In the US, Core Durable Goods Orders looked weak, posting a decline of 0.2%. We’ll get a look at CB Consumer Confidence later in the day.

Japanese Retail Sales was unexpectedly strong in September, climbing 2.3%, its strongest gain since March and well above the estimate of 0.9%. There has been concern about consumer spending in Japan after the sales tax was raised in April from 5% to 8%. The government plans to increase the tax to 10%, but is wary about hurting the economy, which has been marked by modest growth.

In the US, durable goods looked dismal. Core Durable Goods Orders dropped 0.2%, its second decline in three months. This was well short of the estimate of 0.5%. Durable Goods Orders followed suit with a decline of -1.3%. This was a second straight decline, and missed the estimate of 0.4%. Later in the day, the US releases CB Consumer Confidence, with the markets anticipating a strong September reading.

The Federal Reserve will be at center stage on Wednesday, as a two-day meeting wraps up with the release of a policy statement. The Fed is expected to wind up QE, and if policymakers delay this move, the dollar will likely take a hit against its major rivals. The markets will also be looking for hints regarding the timing of a rate hike, which is expected sometime in 2015. Traders should treat this release as a market-mover which could have a significant impact on the direction of USD/JPY.

 

USD/JPY for Tuesday, October 28, 2014

USD/JPY October 28 at 13:50 GMT

USD/JPY 107.90 H: 108.17 L: 107.90

 

USD/JPY Technical

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

 

  • USD/JPY was flat in the Asian session. The pair posted gains in the European session but has retracted.
  • 107.68 continues to provide 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 pointing to gains in long positions on Tuesday. This is consistent with the pair’s movement, as the dollar has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar breaking out of range and moving higher.

 

USD/JPY Fundamentals

  • 12:30 US Core Durable Goods Orders. Estimate +0.5%. Actual -0.2%.
  • 12:30 US Durable Goods Orders. Estimate +0.4%. Actual -1.3%.
  • 13:00 S&P/CS Composite-20 HPI. Estimate 5.7%.
  • 14:00 US CB Consumer Confidence. Estimate 87.4 points.
  • 14:00 US Richmond Manufacturing Index. Estimate 11 points.
  • 23:50 Japanese Retail Sales. Estimate 0.9%. Actual 2.3%.

*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.