USD/JPY – Dollar Pushes Above 113 Yen as US Inflation Matches Forecast

USD/JPY is slightly higher in the Wednesday session. In North American trade, the pair is trading at 113.30. On the release front, US Core CPI and CPI data matched expectations. On Thursday, the US will release three key indicators – Building Permits, Philly Fed Manufacturing Index and Unemployment Claims. There are no Japanese releases on the schedule.

There were no surprises from US consumer inflation numbers in December. CPI, the primary gauge of consumer inflation, edged up to 0.3%, while Core CPI remained unchanged at 0.2%. Both indicators matched the forecasts. Inflation levels are close to the Federal Reserve’s target of two percent, which means that policymakers will likely stick to their plan of gradual, modest rate hikes in 2017. However, the Fed is not expected to raise rates at its next meeting on February 1, given the quarter-point hike in December.

Donald Trump’s shocking election victory in November was warmly received by the markets, as the stock market and the US dollar posted strong rallies. However, confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while tangling with the media and sending off-the-cuff Twitter messages. Trump’s comments earlier this week about the US dollar helped send the currency lower. In an interview with the Wall Street Journal on Monday, Trump complained that the currency was “too strong”. These sentiments were echoed on Tuesday by Trump advisor Anthony Scaramucci. Speaking at the World Economic Forum in Davos, Scaramucci warned that “we must be careful of a rising dollar.” Trump broke with the unwritten rule that US presidents refraining from commenting on the US dollar, and his comments could be a taste of more to come, as Trump is unlikely to veer from his habit of making controversial comments that could affect market movement.

Dollar Retraces Some of Trump’s Intervention Loss

USD/JPY Fundamentals

Wednesday (January 18)

  • 8:30 US CPI. Estimate 0.3%. Actual 0.3%
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
  • 9:15 US Capacity Utilization Rate. Estimate 75.6%. Actual 75.5%
  • 9:15 US Industrial Production. Estimate 0.8%. Actual 0.8%
  • 10:00 US NAHB Housing Market Index. Estimate 69 points. Actual 67 points
  • 11:00 US FOMC Member Neel Kasharki Speech
  • 14:00 US Beige Book
  • 15:00 US Federal Reserve Chair Yellen Speech
  • 16:00 US TIC Long-Term Purchases. Estimate 21.3B

Upcoming Key Events

Thursday (January 19)

  • 8:30 US Building Permits. Estimate 1.22M
  • 8:30 US Philly Fed Manufacturing Index. Estimate 16.3
  • 8:30 US Unemployment Claims. Estimate 252K

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, January 18, 2017

USD/JPY January 18 at 11:00 EST

Open: 112.89 High: 113.64 Low: 112.63 Close: 113.29

USD/JPY Technical

S3 S2 S1 R1 R2 R3
109.85 110.94 112.57 113.80 114.83 115.88
  • USD/JPY posted small gains in the Asian and sessions. The pair has recorded small losses in the North American session
  • 112.57 is providing support
  • 113.80 is the next resistance line
  • Current range: 112.57 to 113.80

Further levels in both directions:

  • Below: 112.57, 110.94 and 109.85
  •  Above: 113.80, 114.83, 115.88 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Wednesday session. Currently, short and long positions are evenly split, indicative of a lack of trader bias as to what direction USD/JPY will take next.

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.