USD/JPY – Yen Surges on Weak US Retail Sales

USD/JPY has sustained sharp losses on Wednesday. In the European session, the pair is trading in the mid-116 range. The yen has taken advantage of awful US retail numbers. Core Retail Sales fell by 1.0%, while Retail Sales dropped 0.9%. In Japan, today’s highlight is Core Machinery Orders, with the markets expecting a strong gain of 4.8.

US retail sales caught the markets off guard with sharp declines in December. Core Retail Sales came in at -1.0%, while Retail Sales followed suit with a loss of 0.9%. Both key indicators recorded their worst showings since May 2010. Part of the sharp drop can be attributed to lower receipts at gasoline stations, as gas prices have fallen sharply in recent weeks. USD/JPY responded sharply to the weak retail numbers, as the pair has fallen about 120 points so far on Wednesday.

The news was rosier on the employment front on Tuesday, as JOLTS Jobs Openings climbed to 4.97 million, easily beating the forecast of 4.86 million. This is the indicator’s highest level since January 2001. The strong employment numbers are a welcome result of the robust economy, as the deepening recovery fuels demand for more workers. The health of the labor market is an important component of any decision to raise interest rates, so upcoming employment releases will be under the market microscope as the Fed mulls when to raise interest rates.

USD/JPY for Wednesday, January 14, 2015

USD/JPY January 14 at 14:25 GMT

USD/JPY 116.60 H: 117.93 L: 116.08

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
112.41 113.64 115.56 116.69 117.94 118.69

 

  • USD/JPY has posted losses in the Asian and European sessions, breaking below two support levels.
  • 116.69 is a weak resistance line. 117.94 is stronger.
  • 115.56 is a strong support level.
  • Current range: 115.56 to 116.69

Further levels in both directions:

  • Below: 115.56, 113.64, 112.41 and 110.11
  • Above: 116.69, 117.94, 118.69, 119.83 and 120.63

 

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged on Wednesday. This is consistent with the pair’s movement, as the pair is showing little change on the day. The ratio has a majority of long positions, indicative of trader bias towards the dollar breaking out of range and moving upwards.

USD/JPY Fundamentals

  • 3:45 Japanese 30-year Bond Auction. Actual 1.12%.
  • 6:00 Japanese Preliminary Machine Tool Orders. Actual 33.8%.
  • 13:30 US Core Retail Sales. Estimate +0.1%. Actual -1.0%.
  • 13:30 US Retail Sales. Estimate +0.2%. Actual -0.9%.
  • 13:30 US Import Prices. Estimate -2.7%. Actual -2.5%.
  • 15:00 US Business Inventories. Estimate 0.2%.
  • 15:30 US Crude Oil Inventories. Estimate 1.2M.
  • 18:01 US 30-year Bond Auction.
  • 19:00 US Beige Book.
  • 23:50 Japanese Core Machinery Orders. Estimate 4.8%.
  • 23:50 Japanese PPI. Estimate 2.2%.

*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.