USD/JPY – Yen Dips, Japanese GDP Looms

The Japanese yen has posted losses in the Thursday session. In North American trade, USD/JPY is trading at 112.67, up 0.32% on the day. On the release front, unemployment claims dipped to 236 thousand, below the estimate of 239 thousand. In Japan, Final GDP in the third quarter is expected to slow to 0.4%.  On Friday, the US publishes three key employment indicators – Average Hourly Earnings, Nonfarm Employment Change and the unemployment rate. As well, the US releases UoM Consumer Sentiment.

BoJ Governor Haruhiko Kuroda continues to drop subtle hints about easing monetary policy. On Thursday, Kuroda said that a change in economic conditions could lead the BoJ to raise its yield target, which would be a significant change to current policy. Kuroda noted that an exit from quantitative and qualitative easing would be “quite an important topic” to communicate to the markets. Although Kuroda has insisted that there will be no reduction of stimulus until the Bank’s inflation target of 2% is met, there has been pressure on him to reconsider, given the marked improvement in Japanese economy this year.  Although the BoJ is unlikely to tighten policy before next year at the earliest, these deliberate hints indicated that the Bank is thinking ahead to a time when conditions will warrant tightening monetary policy, after years of an ultra-accommodative stance.

In the US, this week’s job numbers have met expectations, as unemployment claims and ADP nonfarm payrolls both beat their estimates. However, the stiffer test is on Friday, with the release of nonfarm payrolls and wage growth. The ADP reading slowed considerably compared to the previous release, and the markets are predicting the same trend for nonfarm payrolls, which is expected to come in at 190 thousand. As one of the most important indicators, nonfarm payrolls could shake up the markets, so traders should be prepared for some movement from USD/JPY in Friday’s North American session.

USD/JPY Fundamentals

Thursday (December 7)

  • 00:00 Japanese Leading Indicators. Estimate 106.2%. Actual 106.1%
  • 7:30 US Challenger Job Cuts. Actual 30.1%
  • 8:30 US Unemployment Claims. Estimate 239K. Actual 236K
  • 10:30 US Natural Gas Storage. Estimate -5B
  • 15:00 US Consumer Credit. Estimate 17.4B
  • 18:50 Japanese Final GDP. Estimate 0.4%
  • 18:50 Japanese Bank Lending. Estimate 2.8%
  • 18:50 Japanese Current Account. Estimate 1.93T
  • 19:00 Japanese Average Cash Earnings. Estimate 0.8%

Friday (December 8)

  • 8:30 US Average Hourly Earnings.  Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 198K
  • 8:30 US Unemployment Rate. Estimate 4.1%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.0

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, December 7, 2017

USD/JPY December 7 at 10:35 EDT

Open: 112.29 High: 112.80 Low: 112.22 Close: 112.67

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.10 111.53 112.57 113.55 114.59 115.50

USD/JPY edged higher in the Asian and European sessions. The pair is steady in North American trade

  • 112.57 has switched to a support role after gains by USD/JPY on Thursday. It is a weak line
  • 113.55 is the next resistance line

Current range: 112.57 to 113.55

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

USD/JPY ratio is showing little movement in the Thursday session. Currently, long positions have a majority (55%), indicative of trader bias towards USD/JPY reversing directions and moving lower.

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.