USD/JPY – Yen Steady, Japanese Inflation Report Ahead

The Japanese yen has inched lower in the Monday session. In North American trade, USD/JPY is trading at 112.74. On the release front, Japanese Consumer Confidence increased to 44.9, edging above the estimate of 44.8 points. Although the Japanese consumer remains pessimistic, this marked the strongest reading since September 2013. In the US, Factory Orders declined 0.1%, the first decline since July. Still, this beat the forecast of -0.3%. On Tuesday, the BoJ releases Core CPI, which is expected to remain unchanged at 0.5%. The US publishes ISM Non-Manufacturing PMI, with the markets expecting the indicator to slow to 59.2 points.

President Trump has been pressing for a major legislative win before the end of the year, and it looks like he’ll get tax reform all wrapped up in time for Christmas. The Republicans have pushed through tax legislation through the House and the Senate at breakneck speed. After a false start on Friday, the US Senate passed a tax reform bill on the weekend. The 51-49 vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. Republican lawmakers hope to have Trump sign a bill before the end of the year. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.

Bank of Japan Governor Haruhiko Kuroda spoke at the Europlace financial forum in Tokyo on Monday, but there was nothing new in his message about where the BoJ is headed. Kuroda reiterated that the Bank would maintain its ultra-accommodative monetary policy in order “to achieve the 2 percent inflation target as soon as possible”. The BoJ has been forced to constantly lower its inflation projections, yet the Bank has stubbornly stuck to the 2 percent target. Although the labor market remains tight, this has not translated into higher wages for workers, and nervous consumers have held tight to their purse strings, further contributing to a lack of inflation. Kuroda noted that global economic growth had improved, although he sounded a note of concern about President’s Trump isolationist policy, saying that he hoped that global trade would be conducted under the multilateral trading system.

 

USD/JPY Fundamentals

Sunday (December 3)

  • 18:50 Japanese Monetary Base. Estimate 13.2%. Actual 13.2%

Monday (December 4)

  • 0:00 Japanese Consumer Confidence. Estimate 44.8. Actual 44.9
  • 10:00 US Factory Orders. Estimate -0.3%. Actual -0.1%
  • 22:45 Japanese 10-y Bond Auction

Tuesday (December 5)

  • 0:00 BoJ Core CPI. Estimate 0.5%
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2

*All release times are GMT

*Key events are in bold

 

USD/JPY for Monday, December 4, 2017

USD/JPY December 4 at 11:35 EDT

Open: 112.80 High: 113.09 Low: 112.65 Close: 112.74

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.10 111.53 112.57 113.55 114.59 115.59

USD/JPY ticked higher in the Asian and European sessions. In North American trade, the pair has given up these gains and continues to head lower

  • 112.57 is a weak support line
  • 113.55 is the next resistance line

Current range: 111.53 to 112.57

Further levels in both directions:

  • Below: 112.57, 111.53, 110.10 and 109.12
  • Above:113.55, 114.59 and 115.50

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (53%), indicative of trader bias towards USD/JPY breaking out and moving 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.