USD/JPY – Yen Quiet in Light Holiday Trading

USD/JPY continues to have an uneventful week. The pair is trading at the 123 line in Wednesday’s North American session. In economic news, it’s another quiet day, with the US markets closed for Veterans Day. In Japan, Machine Tool Orders posted a sharp decline of 21%. The markets are expecting better news from Core Machinery Orders, with the estimate standing at 3.3%. On Thursday, we’ll get a look at US Unemployment Claims. As well, Federal Reserve head Janet Yellen speaks at event in Washington.

The US dollar posted strong gains against the Japanese yen late last week, courtesy of the superb NFP reading which exceeded all expectations. In the process, the likelihood of a December rate hike by the Federal Reserve has risen. Still, traders should keep in mind that the Fed has been split over a rate increase, and many members will be hesitant to vote in favor of raising rates unless they are confident that the US economy can withstand such a dramatic move. Employment numbers out of the US have certainly improved, with recent indicators such as the unemployment rate pointing to close to full employment in the US economy. At the same time, other indicators have not fared as well, particularly manufacturing data and inflation levels. While a rate hike in December is again on the table, it is by no means a done deal, making for plenty of speculation on the part of markets players in the next several weeks.

Hoping for an encore after last week’s excellent Nonfarm Payrolls, the markets will be looking for more good news from US employment numbers. Strong job numbers not only point to a solid US economy, but will increase the likelihood of a rate increase in December, an event which would likely send the greenback to higher levels against its rivals. We’ll get a look at unemployment claims on Thursday, with the key indicator expected to drop to 270 thousand. Although last week’s reading of 276 thousand was higher than expected, the four-week indicator, which is less volatile than the weekly measurement, remains at its lowest level since December 1973. A strong reading from unemployment claims could bolster the US dollar.

USD/JPY Fundamentals

Wednesday (Nov. 11)

• 6:03 Japanese Preliminary Machine Tool Orders. Actual -23.1%
• 23:50 Japanese Core Machinery Orders. Estimate 3.3%.

Upcoming Key Releases

Thursday (Nov. 12)

• 13:30 US Unemployment Claims. Estimate 270K
• 14:30 Federal Reserve Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Wednesday, November 11, 2015

USD/JPY November 11 at 17:40 GMT

USD/JPY 123.17 H: 123.44 L: 123.05

USD/JPY Technical

• The Japanese yen has shown limited movement during the day, as it remains close to the 123 line.
• 123.74 continues to provide resistance.
• 122.40 is an immediate support line.
• Current range: 122.40 to 123.74

Further levels in both directions:

• Below: 122.40, 121.50, 120.40 and 118.53
• Above: 123.74, 125.63 and 126.84

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged, consistent with the lack of movement shown by the pair. Long positions retain a slight majority of positions (53%). This is indicative of slight 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.