USD/JPY – Yen at 117, US Jobless Claims Jump

The Japanese yen has been choppy on Thursday, as USD/JPY trades at the 117 line early in the North American session. On the release front, Japanese All Industries Activity posted a sharp decline of 1.0%, missing expectations. Later in the day, Japan will release Manufacturing PMI. Over in the US, it was another disappointing day, as Unemployment Claims shot up to an 11-month high. The Philly Manufacturing Index also declined, but managed to beat the estimate.

Japanese fundamentals have not kept pace with US numbers, and this divergence was underscored on Wednesday, as All Industries Activity fell 1.0% in November, missing the forecast of -0.7%. No less important, this was the indicator’s its third decline in four months. The Japanese economy has been hard hit by the Chinese slowdown as well as weak domestic demand, and inflation levels remain very low. The Bank of Japan remains under strong pressure to increase monetary easing and kick-start the struggling Japanese economy. Such a move would likely weaken the Japanese yen.

The US employment picture may not be as rosy as the markets and the Federal Reserve have hoped. Unemployment Claims jumped to 293 thousand, close to the symbolic 300-thousand level. This was the key indicator’s highest level since February 2015, and will likely dampen enthusiasm for a rate hike in March. Federal Reserve members have also expressed concern about weak inflation levels, and weak CPI numbers for December will not help the case to raise rates for a second time, following the historic rate hike in December. The Fed will hold its monthly policy meeting next week, and although the Fed statement may provide some clues about future monetary policy, it’s very unlikely that the Fed will raise rates at the January meeting.

USD/JPY Fundamentals

Wednesday (Jan. 20)

  • 23:30 Japanese All Industries Activity. Estimate -0.7%. Actual -1.0%

Thursday (Jan. 21)

  • 8:30 US Philly Fed Manufacturing Index. Estimate -5.8 points. Actual -3.5 points
  • 8:30 US Unemployment Claims. Estimate 279K. Actual 293K
  • 10:30 US Natural Gas Storage. Estimate -180B
  • 11:00 US Crude Oil Inventories. Estimate 3.3M
  • 20:35 Japanese Flash Manufacturing PMI. Estimate 51.5 points

*Key releases are highlighted in bold

*All release times are EST

USD/JPY for Thursday, January 21, 2016

USD/JPY January 21 at 7:50 EST

Open: 117.19 Low: 116.47 High: 117.47 Close: 117.00

USD/JPY Technical

S3 S2 S1 R1 R2 R3
113.23 115.45 116.88 118.53 119.58 120.40
  • USD/JPY posted gains in the Asian session but retracted. The pair has been choppy in European and North American trade
  • 116.88 remains busy and has switched to a support role. It is a weak line
  • There is resistance at 118.53
  • Current range: 116.88 to 118.53

Further levels in both directions:

  • Below: 116.88, 115.45, 113.23 and 112.48
  • Above: 118.53, 119.58 and 120.40

OANDA’s Open Positions Ratio

USD/JPY ratio is showing little change on Thursday, consistent with the lack of movement from the pair.  Long positions continue to command a solid majority (63%), which is indicative of strong 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.