USD/JPY – Yen Steady Ahead of US Housing, Manufacturing Reports

USD/JPY has ticked lower on Tuesday, as the pair trades at 110.70. On the release front, there are no Japanese events on the schedule. The US will release Existing Homes and the Richmond Manufacturing Index. Wednesday will be much busier, with a host of key releases in the US, highlighted by Core Retail Sales and the FOMC meeting minutes.

Last week was another rough ride for the Japanese yen, as the currency dropped sharply against the dollar. USD/JPY has surged 5.9 percent since November 7, just prior to the US election. On Monday, USD/JPY climbed above the 111 level for the first time since the end of May. There was some positive news on the economic front, as Japan’s trade balance climbed to JPY 0.47 trillion, beating the forecast of JPY 0.41 trillion. This was the indicator’s largest surplus since February 2015. There are no major Japanese indicators until Thursday, with the release of Tokyo Core CPI.

The US dollar has been on an impressive roll, bolstered by Donald Trump’s election victory earlier this month. With a rate hike in December a near-certainty, sentiment towards the dollar should remain high. However, with a new government taking over the reins, what will happen in early 2017 is a big question mark which could translate into volatility in the markets. Trump’s election promises of more spending and less taxes have been vague and we will have to wait for the new Trump administration to unveil a detailed economic platform. The Federal Reserve is in favor of gradual rate hikes next year, but this assumes that the US economy continues to strengthen. In testimony before a congressional committee last week, Fed chair Janet Yellen acknowledged the uncertainty created by Trump’s victory and said that the Fed might have to adjust its outlook, based on the new president’s economic policies.

USD/JPY Fundamentals

Tuesday (November 22)

  • 10:00 US Existing Home Sales. Estimate 5.43M
  • 10:00 US Richmond Manufacturing Index. Estimate 1 point

Wednesday (November 23)

  • 8:30 US Core Durable Goods Orders. Estimate 0.2%
  • 8:30 US Unemployment Claims. Estimate 241K
  • 10:00 US New Home Sales. Estimate 591K
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 91.6
  • 14:00 US FOMC Meeting Minutes

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, November 22, 2016

USD/JPY November 22 at 10:20 EST

Open: 110.94 High: 111.36 Low: 110.25 Close: 110.71

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.61 109.47 110.68 111.45 112.48 113.86
  • USD/JPY has been marked by choppy trading in the Asian and European sessions
  • 110.68 is a fluid line. Currently, it is providing weak support
  • There is resistance at 111.45
  • Current range: 110.68 to 111.45

Further levels in both directions:

  • Below: 110.68, 109.47, 108.61 and 107.49
  •  Above: 111.45, 112.48 and 113.86

OANDA’s Open Positions Ratio

USD/JPY ratio has shown gains in short positions. Currently, short positions have a majority (61%), indicative of trader bias towards USD/JPY continuing to move lower.

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.