USD/JPY – Dollar Punches Above 114 Yen, US Services Report Next

USD/JPY has started the week with strong gains. Currently, the pair is trading at 114.30. On the release front, Japanese Consumer Confidence dropped to 40.3 points, missing expectations. In the US, today’s key event is ISM Non-manufacturing PMI. The index is expected to improve to 55.3 points.

Although the Japanese economy remains gripped by deflation, the Japanese consumer remains pessimistic and is holding tight to her purse strings. Consumer spending was down in October, as Household Spending and Retail Sales both posted declines. On Monday, Consumer Confidence dropped to 40.9, marking its lowest level since May. November was a dismal month for the yen, as the US dollar ran roughshod over the Japanese currency. USD/JPY surged 9.4 percent, as the yen dropped to 10-month lows. The dollar has surged since the election of Donald Trump and the expected rate hike by the Federal Reserve this month could extend the misery of the struggling Japanese yen.  USD/JPY remains close to 115, which was last breached in February.

The spotlight was on US employment numbers on Friday and the readings were mixed. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The strong labor market has been a key factor in the strong US economy, which saw GDP grow at a clip of 3.2% in the third quarter.

 

USD/JPY Fundamentals

Monday (December 5)

  • 00:00 Japanese Consumer Confidence. Estimate 43.8. Actual 40.9
  • 8:30 US FOMC Member William Dudley Speech
  • 9:45 US Final Services PMI. Estimate 54.9
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 55.3
  • 10:00 US Labor Market Conditions Index
  • 14:05 US FOMC Member James Bullard Speech

*All release times are EST

*Key events are in bold

USD/JPY for Monday, December 5, 2016

USD/JPY December 5 at 8:10 EST

Open: 113.52 High: 114.45 Low: 113.31 Close: 114.40

USD/JPY Technical

S3 S2 S1 R1 R2 R3
111.45 112.48 113.86 114.83 115.85 117.49
  • USD/JPY has posted gains in the Asian and European sessions
  • 113.86 has switched to a support role following gains by USD/JPY
  • 114.83 is the next line of resistance
  • Current range: 113.86 to 114.83

Further levels in both directions:

  • Below: 113.86, 112.48, 111.45 and 110.24
  •  Above: 114.13, 115.45 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in the Monday session. Currently, short positions have a strong majority (58%), 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.