USD/JPY – Yen Gains Ground as US Jobless Claims Disappoints

USD/JPY has posted losses in the Thursday session. In North American trade, USD/JPY is trading at 113.68 down 0.17% on the day. On the release front, Japanese Economy Watchers Sentiment improved to 53.2, beating the estimate of 50.7 points. In the US, unemployment claims climbed to 239 thousand, missing the estimate of 232 thousand. On Friday, the US publishes Preliminary UoM Consumer Sentiment.

The Bank of Japan has faced criticism over its ultra-accommodative stimulus program, but received support from the IMF on Thursday. The IMF stated that the BoJ should maintain the program in order to boost inflation, which remains at low levels, despite a stronger Japanese economy. Critics have argued that the massive stimulus has distorted markets, such as a 26-year high for the Tokyo stock market. However, the BoJ has consistently said that it will not taper the program until inflation moves closer to the Bank’s 2 percent target. This stance puts the BoJ at odds with the Federal Reserve and the ECB, which are looking to reduce stimulus. However, the IMF noted that this divergence had not caused any significant capital outflows out of Asia, since the Fed and ECB had clearly communicated to the markets their shift in policy.

While US President Trump makes headlines with his visit to China, there is plenty of activity in Congress. After failing to pass a new healthcare act, President Trump has his sights set on tax reform, a key item in his domestic platform. Trump wants Congress to pass legislation overhauling the tax code before the end of the year, but that could prove to be too tight of a deadline. Most Democrats have come out against the proposal, and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. The bill is presently being debated in a congressional committee and is expected to move to the House floor next week. The Senate will present its version of the bill on Thursday, so we can expect plenty of activity in Congress in the next few weeks. Expectations that Trump will cut taxes has been the catalyst for a stock market rally over the past year, and if the bill does become law, the US dollar will likely gain ground.

USD/JPY Fundamentals

Thursday (November 9)

• 00:00 Japanese Economy Watchers Sentiment. Estimate 50.7. Actual 52.2
• 8:30 US Unemployment Claims. Estimate 232K. Actual 239K
• 10:00 US Final Wholesales Inventories. Estimate 0.3%. Actual 0.3%
• 10:30 US Natural Gas Storage. Estimate 15B. Actual 15B
• 13:01 US 30-year Bond Auction
• 18:50 Japanese M2 Money Stock. Estimate 4.1%
• 23:30 Japanese Tertiary Industry Activity. Estimate -0.1%

Friday (November 10)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.8

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, November 9, 2017

USD/JPY November 9 at 11:00 EDT

Open: 113.87 High: 114.07 Low: 113.24 Close: 113.68

USD/JPY Technical

USD/JPY edged lower in the Asian and European sessions. The pair has reversed directions in North American trade and is moving higher

• 113.55 was tested earlier in support and remains under pressure
• 114.49 is the next resistance line

Current range: 113.55 to 114.49

Further levels in both directions:

• Below: 113.55, 112.57, 110.94 and 110.10
• Above: 114.49, 115.50 and 116.54

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Thursday session. Currently, short positions have a majority (56%), indicative of trader bias towards USD/JPY continuing to move downwards.

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.