USD/JPY – Yen Stable as Japanese Manufacturing Data Shines

USD/JPY is calm on Wednesday, as the pair in the low-108 range late in the European session. On the release front, today’s highlight is the FOMC policy meeting, with the Fed expected to wind up its QE program. Late Monday, Japanese Preliminary Industrial Production posted a strong gain of 2.7%. There are no Japanese releases on Wednesday.

Japanese data continues to impress this week. Preliminary Industrial Production sparkled in September, with a gain of 2.7%, compared to a reading of -1.5% a month earlier. The estimate stood at 2.3%. Earlier in the week, 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.

The Federal Reserve will be in the spotlight on Wednesday as the US central bank releases its monthly statement. It is widely expected that the Fed will wind up its stimulus scheme, which has been in place since September 2012. Such a symbolic step would mark a vote of confidence in the economy from the powerful Fed. The markets will also be looking for hints regarding the timing of a rate hike, which is expected sometime in 2015. The Fed has noted its concern about the lack of growth in Europe, and a slowdown in China could put a rate hike on hold. Traders should treat the FOMC policy statement as a market-mover which could have a significant impact on the currency markets.

US durable goods looked dismal in September. 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%. There was much better news from CB Consumer Confidence, as the indicator climbed to 94.5 points, up sharply from 86.0 points. This easily beat the estimate of 87.4 and marked a 7-year high. An increase in consumer confidence usually translates into stronger consumer spending, which is a critical component for economic growth.

 

USD/JPY for Wednesday, October 29 2014

USD/JPY October 29 at 13:20 GMT

USD/JPY 108.15 H: 108.23 L: 107.94

 

USD/JPY Technical

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

 

  • USD/JPY has shown little movement in the Asian and European sessions and remains rangebound.
  • 107.68 is an immediate support line.
  • 108.58 is a weak resistance line. 109.82 is stronger.
  • 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 short positions on Wednesday, reversing the direction seen a day earlier. This is not consistent with the pair’s lack of movement. 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

  • 14:30 US Crude Oil Inventories. Estimate 3.3M.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate. Estimate <0.25%.

*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.