USD/JPY – Yen Gains as BOJ Holds Course

USD/JPY has posted losses on Thursday, reversing the trend which has marked the pair during the week. In the North American session, the pair is trading at 122.70. In economic news, the Bank of Japan released its policy statement, refraining from making any new monetary moves. In the US, Unemployment Claims improved to 271 thousand, very close to the estimate of 272 thousand. The Philly Fed Manufacturing Index beat the estimate, coming in at 1.9 points. On Wednesday, the Federal Reserve released the minutes of its most recent policy meeting, as the markets keep an eye out for a possible rate hike in December.

With the Japanese economy mired in a recession, calls are getting louder for the BOJ to  implement further easing in order to kick start the economy, but the BOJ did not make any moves on Thursday. In its policy statement, the BOJ continued to sound optimistic, saying that despite the slowdown in emerging markets, the Japanese economy continues to recover at a moderate pace. Despite the brave face, the BOJ is still under strong pressure to act, and if inflation levels fall even further, policymakers may have no choice but to implement further easing, which would likely send the yen downwards.

The Federal Reserve minutes of the October 28 policy meeting were highly anticipated, as the guessing game about a Fed rate continues. However, there were no surprises from the Fed, and the markets didn’t show much movement after the release. At the meeting, a majority of Fed members said they were in favor of a rate hike in December. The minutes also noted that employment numbers had weakened in recent months, but analysts pointed out that this was prior to the stellar Nonfarm Payrolls report in October. On the inflation front, the minutes stated that Fed policymakers were confident that inflation would remain at stable levels.

In recent months, the Federal Reserve has hinted that a December rate hike is a strong possibility, and most analysts believe that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month. Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi, Japan’s largest bank, said he would be “astounded” if the Fed did not raise rates at their next meeting on December 16, especially in light of the strong Nonfarm Payrolls report in October. One major weak spot in the economy is that of weak inflation levels, and the Fed has repeatedly stated that inflation is a prime factor in its decision-making process. Last week’s PPI was awful, posting a second straight decline. On Tuesday, CPI and Core CPI posted small gains of 0.2%, matching the forecast. Are these lukewarm readings enough to convince a majority of Fed members to vote in favor of a hike? Time will tell. Another important factor which must be remembered is that the markets now seem prepared for a small hike of 0.25% or 0.50%, and there is a growing view that a modest move would not cause unwanted turbulence on the global markets.

The US economy continues to show improvement in most areas, but the manufacturing sector continues to lag behind. There was some positive news on Thursday, as the Philly Fed Manufacturing Index posted a small gain of 1.9 points, beating the estimate of 0.1 points. It marked the indicator’s first gain after two consecutive declines. Earlier this week, the Empire State Manufacturing Index posted its fourth straight decline, underlining worsening conditions in the manufacturing sector. In November, the indicator came in at -10.7 points, weaker than the forecast of -5.3 points.

USD/JPY Fundamentals

Thursday (Nov. 19)

  • 3:17 BOJ Monetary Policy Statement
  • 4:30 Japanese All Industries Activity. Estimate +0.2%. Actual -0.2%.
  • 6:31 BOJ Press Conference
  • 13:30 US Unemployment Claims. Estimate 272K. Actual 271K
  • 15:00 US Philly Fed Manufacturing Index. Estimate 0.1 points. Actual 1.9 points
  • 15:00 US CB Leading Index. Estimate 0.5%. Actual 0.6%
  • 15:30 US Natural Gas Storage. Estimate 23B. Actual 15B
  • 17:30 FOMC Member Dennis Lockhart Speaks
  • 21:45 FOMC Member Stanley Fischer Speaks

*Key releases are highlighted in bold

*All release times are GMT


USD/JPY for Thursday, November 19, 2015

USD/JPY November 19 at 16:20 GMT

USD/JPY 122.68 H: 123.56 L: 122.67


USD/JPY Technical

S3 S2 S1 R1 R2 R3
120.40 121.50 122.40 123.74 125.63 126.84
  • The Japanese yen posted slight losses in the Asian session. USD/JPY posted stronger losses in the European session and the downward trend continues in North American trade.
  • 123.74 has strengthened in resistance as the pair trades at lower levels.
  • 122.40 is under pressure and could break in the North American session.
  • 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 unchanged on Thursday, despite strong gains by the yen. Long positions retain a slight majority of positions (54%), which is indicative of slight trader bias towards the pair reversing directions and moving higher.

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.