USD/JPY – Yen Quiet Ahead of Federal Reserve Minutes

USD/JPY is showing little movement in the Wednesday session. Currently, the pair is trading at 117.60. There are no major Japanese events on the schedule. In the US, today’s highlight is the Federal Reserve minutes from the December meeting. On Thursday, the US releases ISM Non-Manufacturing PMI and two key employment indicators – ADP Employment Change and Unemployment Claims.

The markets are eagerly awaiting the release of the Federal Reserve minutes from the December policy meeting. At that meeting, the Fed finally raised rates for the first time since December 2015. Analysts will be combing through the minutes, looking for clues regarding future monetary policy. The US economy is performing very well, and the markets are hopeful that this continues as Donald Trump takes office. Trump’s economic policies remain sketchy, although he has promised to increase fiscal spending while lowering taxes. If the economy’s positive momentum continues, the Fed could be inclined to raise rates another quarter point in order to prevent the economy from overheating. If the markets remain bullish about further rate hikes, the US dollar could continue to climb in early 2017.

The Japanese yen had a dismal fourth quarter in 2016. The currency plunged 14.7 percent in Q4, as the US dollar took full advantage of a strong US economy and a hawkish Federal Reserve, which raised interest rates in December. The Japanese economy continues to struggle, and last week’s key consumer indicators pointed to continuing weakness in inflation and spending. Household Spending and Tokyo Core CPI continued to post declines, as consumers are holding tight on the purse strings and the economy remains gripped in deflation. If the US economy continues to heat up in 2017, we could see the Fed step in with further rate hikes, which would likely push the yen to even lower levels.

FOMC Minutes Eyed as Dow Edges Towards 20,000

How Much Juice Has the Big Dollar Got?

Wednesday (January 4)

  • All Day – US Total Vehicle Sales. Estimate 17.8M
  • 14:00 US FOMC Meeting Minutes
  • 18:50 Japanese Monetary Base. Estimate 22.3%
  • 22:45 Japanese 10-year Bond Auction

Thursday (January 5)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 171K
  • 8:30 US Unemployment Claims. Estimate 262K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.6

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, January 4, 2017

USD/JPY January 4 at 7:05 EST

Open: 117.63 High: 118.19 Low: 117.36 Close: 117.49

USD/JPY Technical

S3 S2 S1 R1 R2 R3
114.83 115.88 116.88 118.05 118.85 119.83
  • USD/JPY posted gains in the Asian session but has given up these gains in European trade
  • 116.88 is providing support
  • 118.05 is the next line of resistance
  • Current range: 116.88 to 118.05

Further levels in both directions:

  • Below: 116.88, 115.88 and 114.83
  •  Above: 118.05, 118.85, 119.83 and 121.39

OANDA’s Open Positions Ratio

USD/JPY ratio has shown little movement this week. Currently, short positions have a majority (56%), indicative of trader bias towards USD/JPY continuing to move to lower ground.

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.