USD/JPY – Yen at 114, Markets Eye US Jobless Claims

USD/JPY has posted slight gains on Thursday, erasing the losses sustained in Wednesday’s session. In the European session, USD/JPY is trading at the 114 line. In economic news, it’s a busy day in the US, led by two major events – Unemployment Claims and ISM Non-Manufacturing PMI. Later in the day, Japan releases Average Cash Earnings.

Japanese consumer numbers have taken a hit this week, as consumers are clearly jittery about the economy. Retail Sales, the primary gauge of consumer spending, came in at -0.1%, marking a third straight decline. There was no relief from Household Spending, which posted a sharp drop of 3.1 percent, short of the forecast of a 2.5 percent decline. The indicator has now posted declines for five consecutive months. These weak figures point to a Japanese consumer who has tightened the purse strings and is cutting back on spending. At the same time, the Japanese yen enjoyed a superb February, surging over 7 percent against the US dollar. The yen has thrived despite poor domestic economic conditions, thanks to its status as a safe-haven asset which has attracted investors looking to avoid risk. However, Japanese fundamentals are unlikely to show much improvement, so the BOJ may have to step in and take further monetary action at its policy meeting later in March. At the January meeting, the BOJ adopted negative interest rates, shocking the markets and sending the yen sharply lower. If the BoJ decides to make a move later this month, it would likely push the yen to lower levels.

US job reports are closely monitored by the markets, and a robust labor market in 2015 was a key reason that the Federal Reserve opted to raise rates in December. This year’s employment numbers have been mixed, but there was good news on Wednesday, as ADP Nonfarm Payrolls improved to 214 thousand, crushing the estimate of 185 thousand. Will we see a repeat in the official Nonfarm Payrolls on Friday? A strong NFP release could revive speculation about a March rate hike by the Federal Reserve, although this scenario remains very unlikely. Meanwhile, there has been some improvement in the manufacturing sector, which has persistently posted poor numbers. Last week, durable goods reports sparkled, easily beating expectations. ISM Manufacturing PMI improved to 49.5 points in January. Although this points to contraction, this reading beat expectations and marked a four-month high.

USD/JPY Fundamentals

Thursday (March 2)

  • 7:30 US Challenger Job Cuts
  • 8:30 US Unemployment Claims. Estimate 271K
  • 8:30 US Revised Nonfarm Productivity. Estimate -3.2%
  • 8:30 US Revised Unit Labor Costs. Estimate 4.8%
  • 9:45 US Final Services PMI. Estimate 49.8 points
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 53.2 points
  • 10:30 US Factory Orders. Estimate 2.1%
  • 10:30 US Natural Gas Storage. Estimate -49B
  • 20:30 Japanese Average Cash Earnings. Estimate 0.2%

Upcoming Key Events

Friday (March 4)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change.Estimate 195K
  • 8:30 US Unemployment Rate. Estimate 4.9%
  • 8:30 US Trade Balance. Estimate -43.5B

*Key releases are highlighted in bold

*All release times are EST

USD/JPY for Thursday, March 3, 2016

USD/JPY March 3 at 7:25 EST

Open: 113.50 Low: 113.44 High: 114.26 Close: 114.04

USD/JPY Technical

S3 S2 S1 R1 R2 R3
111.50 112.48 113.86 114.65 115.85 116.65
  • USD/JPY posted gains in the Asian session. The pair has been hugging the 114 line for most of the European session.
  • 113.86 remains busy and has switched back to support following gains by USD/JPY
  • There is resistance at 114.65
  • Current range: 113.86 to 114.65

Further levels in both directions:

  • Below: 113.86, 112.48, 111.50 and 109.87
  • Above: 114.65, 115.85 and 116.65

OANDA’s Open Positions Ratio

USD/JPY ratio continues to show little movement, as long positions retain a strong majority (64%). This is indicative of strong trader bias towards the pair continuing to move 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.