USD/JPY – Dollar Pushes Above 114 on Weak Japanese Mfg. Report

USD/JPY has posted slight gains in Monday trading. In the North American session, the pair is trading just above the 114 level. On the release front, Japanese data started off the weak on a sour note. Core Machinery Orders declined 3.6%, well off the forecast of a 1.7% gain. Japan’s current account surplus dropped to JPY 1.40 trillion, short of the estimate of JPY 1.63 trillion. There are no major events in the US.

Japan’s economy has improved in 2017, buoyed by a stronger global economy. This has translated into increased demand for Japanese goods and this has boosted the manufacturing and export sectors. The Tankan Manufacturing Index jumped to 17 in the first quarter, its strongest showing since 2014. However, Core Machinery Orders is raising some concerns, as the indicator has posted two straight declines of 3.1% and 3.6%. We’ll get a look at Preliminary Industrial Production on Friday. The indicator recorded a strong gain of 4.0% in April, but the markets are braced for a sharp downturn in June, with an estimate of -3.3%. If manufacturing indicators continue to miss expectations, the yen could continue to lose ground.

The US wrapped up last week with key employment numbers, and the data was mixed. Nonfarm Payrolls rebounded in June, climbing to 222 thousand. This easily beat the estimate of 175 thousand and marked a 4-month high. However, wage growth remains soft, as Average Hourly Earnings was unchanged at 0.2%, shy of the forecast of 0.3%. Weak wage growth has remained soft throughout the first half of 2017, despite a tight labor market. With wages remaining stagnant, inflation is also mired at low levels. If inflation does not improve, the Federal Reserve may have second thoughts about a rate hike in December. Currently, the odds of an increase in December have dipped to 47%, as the markets clearly have their doubts that the Fed will press the rate trigger.

USD/JPY Fundamentals

Sunday (July 9)

  • 19:50 Japanese Bank Lending. Actual 3.3%
  • 19:50 Japanese Core Machinery Orders. Estimate +1.7%. Actual -3.6%
  • 19:50 Japanese Current Account. Estimate 1.63T. Actual 1.40T

Monday (July 10)

  • 1:00 Japanese Economy Watchers Sentiment. Estimate 49.0. Actual. 50.0
  • 10:00 US Labor Market Conditions Index. Actual 1.5
  • 15:00 US Consumer Credit. Estimate 12.1B
  • 19:50 Japanese M2 Money Stock

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, July 10, 2017

USD/JPY July 10 at 11:15 EDT

Open: 113.91 High: 114.31 Low: 113.88 Close: 114.12

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.94 112.57 113.55 114.37 115.51 116.87

USD/JPY posted slight losses in the Asian session but recovered in European trade. The pair is down slightly in the North American session

      • 113.55 is providing support
      • 114.37 is a weak resistance line. It could break during the North American session
      • Current range: 113.55 to 114.37

Further levels in both directions:

      • Below: 113.55, 112.57, 110.94 and 109.77
      •  Above: 114.37, 115.51 and 116.87

OANDA’s Open Positions Ratio

In the Monday session, USD/JPY ratio is showing long positions with a slim majority (51%), 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.