The Japanese yen remained steady against the US dollar, as the pair was trading in the low-92 range in Thursday trading. The major story of the day was the designation of Haruhiko Kuroda, President of the Asian Development Bank, to the post of governor of the Bank of Japan. In economic releases, Japanese manufacturing and housing data was weak, while US key releases continued to look sharp.
In Japan, Prime Minister Abe nominated Haruhiko Kuroda to become the new governor of the Bank of Japan. Haruhiko will replace Masaaki Shirakawa, who steps down from the position in a few weeks time. The media had already reported that Kuroda would be nominated for the job, and the markets appeared to have factored this in, thus explaining why the news has had almost no impact on USD/JPY. Kuroda is a proponent of aggressive monetary easing, and will likely be an important ally of Prime Minister Abe in his attempts to kick-start the anemic Japanese economy. Abe also nominated two new deputy governors, Kikuo Iwata and Hiroshi Nakaso.
Japanese economic indicators did not impress the markets. Manufacturing PMI climbed to 48.5 points, but the index has not cracked the 50-point level since last May, indicating that the Japanese manufacturing sector continues to contract. Preliminary Industrial Production posted a 1.0% gain, failing to meet the estimate of 1.6%. Japanese Housing Starts was also a disappointment, climbing 5.0%. This was a much smaller gain than the previous release, and fell well below the estimate of 8.9%. The story was completely different in the US, as key indicators sparkled for a second straight day. Core Durable Goods Orders climbed 1.9%, easily exceeding the estimate of 0.3%. Pending Home Sales shot up 4.5%, well above the estimate of 1.7%. There was some disappointment from Durable Goods Orders, which declined 5.2%. The estimate stood at -4.8%.
The Federal Reserve was in the spotlight this week as Fed Chief Bernard Bernanke sought to reassure the markets that the Fed was intent on continuing the current round of QE. Bernanke dismissed fears that the Fed’s current monetary policy could result in higher inflation or lead to a stock market bubble. There had been some speculation after the release of minutes from the most recent policy meeting, that the Fed was contemplating an end to QE, but Bernanke stated that Fed plans to continue QE and the current policy of ultra-low interest rates.
USD/JPY for Thursday, Feb 28, 2013
USD/JPY Feb 28 at 12:00 GMT
USD/JPY 92.14 H: 92.67 L: 92.01
USD/JPY is steady, as the pair trades in the low-92 range. The pair is facing resistance at 92.53. This is followed by resistance at 93.14. On the downside, there is support at 91.94, just below the 92 level. This is a weak line, and could see activity if the yen shows any momentum. The next support level is at 91.30.
- Current range: 91.94 to 92.53
Further levels in both directions:
- Below: 91.94, 91.30, 90.91, 90.18, 89.34 and 88.19
- Above: 92.53, 93.14, 94.59 and 95.27
OANDA’s Open Position Ratios
The USD/JPY ratio is very quiet in Thursday trading. This lack of activity is reflected in the pair, which has showed little movement. The ratio remains close to an event split, indicating that trader sentiment is evenly divided as to which direction USD/JPY is headed. The pair is unlikely to remain boxed in for a long period of time, and we can expect the ratio to resume movement as well.
After sharp gains early in the week, USD/JPY has been marked by narrow range trading. Will the pair be able to sustain some momentum and break out? With the continuing political crisis in Italy, and more key data due of the US on Thursday, we could see some fluctuation from the pair.
- 5:00 Japanese Housing Starts. Estimate 8.9%. Actual 5.0%.
- 13:30 US Preliminary GDP. Estimate 0.5%.
- 13:30 US Unemployment Claims. Estimate 361K.
- 13:30 US Preliminary GDP Price Index. Estimate 0.6%.
- 14:45 US Chicago PMI. Estimate 54.6 points.
- 15:30 US Natural Gas Storage. Estimate -165B.
- 17:30 US FOMC Member Sarah Bloom Raskin Speaks.
*Key releases are highlighted in bold
*All release times are GMT
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