USD/JPY – Yen Yawns as BoJ Maintains Rates

USD/JPY has moved higher in the Tuesday session, as the pair trades at the 105 line. In economic news, the BoJ held interest rates in negative territory. In the US, today’s key event is ISM Manufacturing PMI.

As expected, the BoJ stayed on the sidelines and made no changes to its monetary policy. The bank maintained interest rates at -0.10% and also lowered its inflation forecast for 2017, from 1.7 percent to 1.5 percent. In its policy statement, the bank said that with regard to risk balance, risks to both economic activity and prices are skewed to the downside” and expects exports to remain “sluggish”. The Japanese consumer remains in a surly mood, continuing to hold her purse strings tight in uncertain economic times. Retail Sales continue to contract, as the September reading of -1.9% was only slightly better than the August report of -2.1%. The indicator has managed only one gain in 2016.

In the US, there was positive news from the consumer front on Monday, as Personal Spending rebounded with a 0.5% gain in September, after a flat reading of 0.0% in August. Gold responded to the reading with slight losses. This release comes on the heels of a disappointing consumer spending report on Friday, as UoM Consumer Sentiment fell to 87.2 points in October, below expectations and dropping to its lowest level since August 2015.  The Fed will also hold a policy meeting on Wednesday, but the markets aren’t expecting a rate move so close to the US presidential election. The rate statement will be carefully monitored, as analysts comb for hints about the extent of support among FOMC members ahead of the crucial December meeting.

USD/JPY Fundamentals

Monday (October 31)

  • 22:55 BoJ Outlook Report
  • Tentative – BoJ Policy Rate. Estimate -0.10%. Actual -0.10%
  • Tentative – BoJ Monetary Policy Statement
  • 2:30 BoJ Press Conference

Tuesday (November 1)

  • 9:45 US Final Manufacturing PMI. Estimate 53.3
  • 10:00 US ISM Manufacturing PMI. Estimate 51.8
  • 10:00 US Construction Spending. Estimate 0.5%
  • 10:00 US IBD/TIPP Economic Optimism. Estimate 48.7
  • 10:00 US ISM Manufacturing Prices. Estimate 54.0
  • All Day – US Total Vehicle Sales

*All release times are EDT

*Key events are in bold

USD/JPY for Tuesday, November 1, 2016

USD/JPY October 31 at 9:05 EDT

Open: 104.82 High: 105.12 Low: 104.61 Close: 104.86

USD/JPY Technical

S3 S2 S1 R1 R2 R3
102.36 103.02 104.32 105.44 106.72 107.49
  • USD/JPY was flat in the Asian session. In European trade, the pair posted slight gains but has retracted
  • 104.32 is providing support
  • There is resistance at 105.44
  • Current range: 104.32 to 105.44

Further levels in both directions:

  • Below: 104.32, 103.02, 102.36 and 101.20
  •  Above: 105.44, 106.72 and 107.49

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Tuesday session. Currently, long positions have a majority (55%), indicative of slight trader bias towards USD/JPY breaking out and moving to higher levels.

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.