USD/JPY – Japanese Yen Unchanged Ahead of Japanese Mfg. Reports Next

The Japanese yen is showing little movement in the Wednesday session. Currently, USD/JPY is trading at 112.20. On the release front, it’s a very light day. Japanese Economy Watchers Sentiment slipped to 49.8, pointing to pessimism among workers about economic conditions. There are no major US events on the schedule. On Thursday, the US releases the weekly unemployment claims report, which is expected to rise to 249 thousand.

Japanese Prime Minister Shinzo Abe will meet with President Trump in Washington on Friday, and the Japanese are hoping to sooth some ruffled furthers on the American side. Trump recently accused Japan of unfair trade practices in its ultra-loose monetary policy, which has kept the yen at low levels and helped boost Japanese exports. The Japanese have argued that they are not targeting the yen’s value, but have their work cut out for them in trying to assuage Trump, who hasn’t hesitated to fire verbal salvos at the United States’ closest trading partners. Japan is heavily reliant on its export sector, and Abe will be hoping that Trump’s protectionist rhetoric does not translate into actual moves against Japan, which can ill afford a trade war with the US.

Abe Hoping to Move Conversation Away From Monetary Policy

Just a few weeks on the job, President Donald Trump continues to create controversy and his protectionist rhetoric is not endearing him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017 (the same sound track we heard at the start of 2016), was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow at a brisk clip, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground against major currencies such as the yen.

USD/JPY Fundamentals

Wednesday (February 8)

  • 00:00 Japanese Economy Watchers Sentiment. Estimate 51.9. Actual 49.8
  • 10:30 US Crude Oil Inventories. Estimate 2.7M
  • 13:01 US 10-y Bond Auction
  • 18:50 Japanese Core Machinery Orders. Estimate 3.2%
  • 18:50 Japanese M2 Money Stock. Estimate 4.0%
  • 22:45 Japanese 30-y Bond Auction

Thursday (February 9)

  • 1:00 Japanese Preliminary Machine Tool Orders
  • 8:30 US Unemployment Claims. Estimate 249K

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, February 8, 2017

USD/JPY February 8 at 6:50 EST

Open: 112.38 High: 112.54 Low: 112.03 Close: 112.24

USD/JPY Technical

S3 S2 S1 R1 R2 R3
109.85 109.85 110.94 112.57 113.80 114.83

USD/JPY has shown limited movement in the Asian and European sessions

  • 110.94 is providing support
  • 112.57 remains a weak resistance line. It could break in the Wednesday session
  • Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 109.85 and 108.61
  •  Above: 112.57, 113.80, 114.83 and 115.90

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Wednesday session. Currently, long positions have a slender majority (52%), indicative of slight trader bias towards USD/JPY continuing to climb higher.

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.