USD/JPY – Wobbly Yen Under Pressure as Abe Calls Snap Election

The Japanese yen is flat on Tuesday, as USD/JPY continues to trade in the mid-116 range.  In economic news, the US Producer Price Index posted a gain of 0.2%, beating expectations. The markets are expecting another weak reading, with an estimate of -0.1%. There are no Japanese releases on Tuesday. Early on Wednesday, the BoJ releases its monetary policy statement.

The struggling Japanese economy officially slipped into recession, as GDP has posted two straight declines. In Q3, GDP declined -0.4%, well below the estimate of 0.5%. Prime Minister Abe responded by delaying an increase in the sales tax to 10%. Abe then surprised the markets by announcing elections halfway through his term. The upcoming election could end up as a referendum on Abenomics, which has involved sharp monetary easing and heavy government spending.

US inflation numbers have been weak, but the news was good on Tuesday. PPI beat expectations with a modest gain of 0.2%. This marked a 4-month high and beat the estimate of -0.1%. Core PPI, which excludes the most volatile items counted in PPI, posted a gain of 0.4%, above the forecast of 0.2%. This was the index’s best showing since April. We’ll get a look at consumer inflation data on Thursday.

USD/JPY for Tuesday, November 18, 2014

USD/JPY November 18 at 15:10 GMT

USD/JPY 116.67 H: 117.05 L: 116.34

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
113.68 114.65 115.75 116.66 117.94 118.89

 

  • USD/JPY was flat in the Asian session. The pair tested resistance at 116.66 in the European session, touching a high of 117.07. The pair has since retracted.
  • 116.61 is a weak resistance line. 117.94 is stronger.
  • 115.75 is the next support level. 114.65 is stronger.
  • Current range: 115.75 to 116.66

Further levels in both directions:

  • Below: 115.75, 114.65, 113.68, 112.94 and 110.68
  • Above: 116.66, 117.94, 118.89 and 119.83

 

OANDA’s Open Positions Ratio

USD/JPY is pointing to gains in short positions on Tuesday. This is consistent with the movement of USD/JPY, which has showed very small losses. The ratio is showing an even split between long and short positions, indicative of a lack of trade bias as to what to expect from the pair.

 

USD/JPY Fundamentals

  • 13:30 US PPI. Estimate -0.1%. Actual +0.2%.
  • 13:30 US Core PPI. Estimate 0.2%. Actual 0.4%.
  • 15:00 US NAHB Housing Market Index. Estimate 55 points.
  • 18:30 US FOMC Member Narayana Kocherlakota Speaks.
  • 21:00 US TIC Long-Term Purchases. Estimate 41.3B.

*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.