USD/JPY – Yen Jumps on Political Turmoil in US, Japanese GDP Next

USD/JPY has recorded considerable losses in the Wednesday session, after a quiet start to the week. In North American trade, the pair is trading at 111.60. On the release front, Japanese Revised Industrial Production posted a decline of 1.9%, just above the estimate of a 2.1% decline. Later in the day, Japan releases Preliminary GDP for the first quarter, with an estimate of 0.4%. There are no major US releases on the schedule. On Thursday, the US releases unemployment claims and the Philly Fed Manufacturing Index.

The Japanese yen has recorded considerable gains on Wednesday, buoyed by the growing political turmoil which has engulfed Washington. Media reports on Tuesday said that Trump asked former FBI director James Comey to end an investigation into ties between Russia and Trump’s former security adviser, Michael Flynn. This has led to speculation that Trump may have committed an obstruction of justice. Another brewing controversy is Trump’s passing of classified intelligence to the Russian foreign minister. Trump initially denied the claim, but has since backtracked, admitting that he did share intel with the Russians, but that he had acted within his rights. With the Trump administration busy putting out political fires, investors are growing increasingly nervous that the president’s agenda for a stimulus package and tax reform will stall.

Bank of Japan Governor Haruhiko Kuroda said on Wednesday that he was confident that the central bank could smoothly exit from its huge monetary stimulus when appropriate, but noted that wages and inflation remained sluggish, despite a stronger economy. Kuroda added that the central bank had no plans to revise its monetary stance, and said that the Federal Reserve’s tightening stance would not affect the decisions of the BoJ. Stronger global demand has boosted Japan’s manufacturing and export sectors, but inflation is stuck around zero percent and consumer spending remains soft. We’ll get a look at Tokyo Core CPI and other inflation indicators next week. 

No Reprieve for Dollar as Trump Troubles Mount

USD/JPY Fundamentals

Wednesday (May 17)

  • 00:30 Japanese Revised Industrial Production. Estimate -2.1%. Actual -1.9%
  • 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual -1.8M
  • 19:50 Japanese Preliminary GDP. Estimate 0.4%
  • 19:50 Japanese Preliminary GDP Price Index. Estimate -0.7%

Thursday (May 18)

  • 8:30 US Unemployment Claims. Estimate 240K
  • 8:30 US Philly Fed Manufacturing Index. Estimate 19.9 

*All release times are GMT

*Key events are in bold

 

USD/JPY for Wednesday, May 17, 2017

USD/JPY May 17 at 10:45 EDT

Open: 113.12 High: 113.15 Low: 111.40 Close: 111.46

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.13 109.77 110.94 112.57 113.55 114.96

USD/JPY posted losses in the Asian session. The pair was flat in European trade and has resumed its downward trend in the North American session

  • 110.94 is providing support
  • 112.57 is the next line of resistance
  • Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 109.77 and 108.13
  •  Above: 112.57, 113.55, 114.96 and 115.90

OANDA’s Open Positions Ratio

USD/JPY ratio remains unchanged this week. Currently, long and short positions are almost evenly split, indicative of a lack of trader bias as to which 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.