USD/JPY – Dollar Punches Past 113, Tokyo Core CPI Next

USD/JPY has posted gains on Thursday, continuing the upward trend seen in the Wednesday session. Currently, the pair is trading at 113.40. On the release front, Japan will publish inflation indicators, highlighted by Tokyo Core CPI. There are no US events, as markets are closed for the Thanksgiving holiday.

The US dollar posted sharp gains on Wednesday, bolstered by excellent durable goods reports. Core Durable Goods Orders rose 1.0%, well above the estimate of 0.2%. Durable Goods Orders surged 4.8%, crushing the estimate of 1.2%. These strong numbers point to a welcome improvement in business investment, and strong consumer fundamentals could see business spending numbers continue to improve. There was positive news on the consumer front, as the UoM Consumer Sentiment index climbed to 93.8, above the forecast of 91.6.

It’s been up, up and away for the US dollar, which continues to run roughshod over the wobbly Japanese yen. The yen continues to slide, and USD/JPY has surged 8.3 percent since November 7, just prior to the US election. Currently, the pair is at its highest level since March, and the dollar’s impressive rally shows no signs of slowing down.

The US dollar has posted broad gains in November against most major currencies, and 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

Thursday (November 24)

  • 18:30 Tokyo Core CPI. Estimate -0.4%
  • 18:30 National Core CPI. Estimate -0.4%
  • 18:50 Japanese SPPI. Estimate 0.3%

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, November 24, 2016

USD/JPY November 24 at 8:00 EST

Open: 112.55 High: 113.53 Low: 112.41 Close: 113.44

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.68 111.45 112.48 113.86 114.13 115.45
  • USD/JPY posted slight gains in the Asian session and continues to make gains in the European session.
  • 112.45 is providing support
  • There is resistance at 113.86
  • Current range: 112.48 to 113.86

Further levels in both directions:

  • Below: 112.48, 111.45, 110.68 and 109.47
  •  Above: 113.86, 114.13 and 115.45

OANDA’s Open Positions Ratio

USD/JPY ratio has  shown movement towards long positions. Currently, short positions have a majority (57%), indicative of trader bias towards USD/JPY reversing directions and moving 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.