USD/JPY – Slumping Yen Hits 7-Year Low

The Japanese yen continues to lose ground on Wednesday, as USD/JPY continues to trade in the mid-117 range. The yen has not been at such low levels since October 2007.  On the release front, there were no surprises from the BoJ, which made no changes to monetary policy. In the US, housing numbers were a mix, as Building Permits climbed to 1.08 million, while Housing Starts edged lower to 1.01 million.

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.

In the US, housing data was a mix on Wednesday. Building Permits was unexpectedly strong, climbing to 1.08M. This beat the estimate of 1.04M and marked a six-month high. Housing Starts could not keep pace, edging lower to 1.01M. The estimate stood at 1.03M. We’ll get a look at consumer inflation numbers on Thursday, with the release of CPI and Core CPI.

 

USD/JPY for Wednesday, November 19, 2014

USD/JPY November 19 at 16:15 GMT

USD/JPY 117.64 H: 117.68 L: 116.82

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
114.65 115.75 116.66 117.94 118.89 119.93

 

  • USD/JPY broke through resistance at 116.66 in the Asian session and continued to post gains in European trade.
  • 117.94 is a weak resistance line. This line was last tested in October 2007. 118.89 is stronger.
  • 116.66 has reverted to a support role as the yen continues to lose ground.
  • Current range: 116.66 to 117.94

Further levels in both directions:

  • Below: 116.66, 115.75, 114.65, 113.68 and 112.94
  • Above: 117.94, 118.89, 119.83 and 120.63

 

OANDA’s Open Positions Ratio

USD/JPY is pointing to gains in long positions on Wednesday, reversing the direction seen a day earlier. This is consistent with the movement of USD/JPY, which has posted gains. The ratio remains close to 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

  • 3:24 BoJ Monetary Policy Statement.
  • 4:30 Japanese All Industries Activities. Estimate 1.2%. Actual 1.0%.
  • 6:29 BoJ Press Conference.
  • 13:30 US Building Permits. Estimate 1.04M. Actual 1.08M.
  • 13:30 US Housing Starts. Estimate 1.03M. Actual 1.01M.
  • 15:30 US Crude Oil Inventories. Estimate -0.7M.
  • 19:00 US FOMC Meeting Minutes.

*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.