USD/JPY – Yen Posts Modest Gains on Weak US Durables, Consumer Confidence

USD/JPY has posted modest losses on Tuesday, as the pair trades at 120.40 in the North American session. US durables looked weak, as Core Durable Goods Orders declined 0.4%, while Durable Goods Orders came in at -1.2%. As well, CB Consumer Confidence came slipped to 97.6 points, missing expectations. Later on Tuesday, we’ll get a look at Japanese Retail Sales, the primary gauge of consumer spending.

It was a disappointing day for US releases. US durables, which helps gauge the strength of the manufacturing sector, were dismal in the September reports. Core Durable Goods Orders fell 0.4%, compared to the forecast of 0.0%. It marked the indicator’s first decline in six months. There was no relief from Durable Goods Orders, which posted a sharp decline of 1.2%, although this was within expectations. This was the indicator’s second straight decline, and these weak figures underscore a weak manufacturing sector, which continues to be hampered by weak global demand for US goods. On the consumer front, CB Consumer Confidence dipped to 97.6 points, well below the forecast of 102.5 points.

Meanwhile, we’re getting mixed messages about the health of the US housing sector. Existing Housing Sales looked sharp last week, improving to 5.55 million, which was well above the estimate of 5.38 million. The news was much worse from New Home Sales on Monday, as the indicator slid to just 468 thousand, its lowest level in 10 months. The markets had expected a strong reading of 546 thousand.

It promises to be a busy week, as the Federal Reserve issues a policy statement on Wednesday. Any hints about a rate hike could spark a dollar buying spree. Will the Fed finally provide some clarity about its monetary plans? Such transparency and lack of communication from the Fed has been lacking and has been a source of frustration for the markets, which continue to receive conflicting signals from Fed policymakers regarding the timing of a rate hike. On Thursday, the US releases a market-mover, Advance GDP for the fourth quarter. The markets are expecting a gain of 1.6%, compared to Final GDP in the third quarter of 3.9%.

 

USD/JPY Fundamentals

Tuesday (Oct. 27)

  • 12:30 US Core Durable Goods Orders. Estimate 0.0%. Actual -0.4%
  • 12:30 US Durable Goods Orders. Estimate -1.1%. Actual -1..2%
  • 13:00 US S&P/CS Composite-20 HPI. Estimate 5.1%. Actual 5.1%
  • 13:45 US Flash Services PMI. Estimate 55.3 points. Actual 54.4 points
  • 14:00 US CB Consumer Confidence. Estimate 102.5 points.  Actual 97.6 points 
  • 14:00 US Richmond Manufacturing Index. Estimate -3 points. Actual -1 point
  • 23:50 Japanese Retail Sales. Estimate 0.4%.

Upcoming Key Events

 

Wednesday (Oct. 28)

  • 18:00 FOMC Statement
  • 18:00 Federal Funds Rate. Estimate <0.25%

 

USD/JPY for Tuesday, October 27, 2015

USD/JPY October 27 at 18:10 GMT

USD/JPY 120.91 H: 121.34 L: 120.55

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
116.90 118.53 120.40 121.50 122.40 123.74
  • USD/JPY posted losses in the Asian session. The pair has shown little movement in the European and North American sessions.
  • 120.40 is a weak support level.
  • 121.50 is an immediate resistance line.
  • Current range: 120.40 to 121.50

Further levels in both directions:

  • Below: 120.40, 118.53, 116.90, and 115.90
  • Above: 121.50, 122.40 and 123.74

 

OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in long positions on Tuesday, and long positions currently have a commanding majority (58%). This is indicative of trader bias towards the pair moving to higher ground.

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.