USD/JPY – Steady as New BOJ Governor calls for Aggressive Action

USD/JPY is steady in Tuesday trading, as the pair was trading in the low-93 range. At a confirmation hearing, the nominee for governor of the Bank of Japan stated that he favored aggressive monetary action to kick-start the economy. In economic news, Japanese Average Cash Earnings broke a streak of two straight declines, climbing 0.7%. This easily beat the estimate of -0.3%. Today’s highlight is US ISM Non-Manufacturing PMI.

In Japan, Haruhiko Kuroda, who is expected to become the new governor of the BOJ later this month, testified at a confirmation hearing in Japan’s lower house of parliament. Kuroda is a proponent of strong monetary measures to kick-start the economy. Kuroda said that he would not set limits on the amount of funds the BOJ would inject into the economy. Regarding inflation, Kuroda said that the BOJ’s current policies were not strong enough to boost inflation to the government’s target of 2%. Kuroda suggested that the BOJ consider commencing its open-ended asset purchases before the scheduled start of 2014. He took pains to note that the BOJ is not targeting the yen, which continues to trade at multi-year lows.

Back in the US, Janet Yellen, vice-chair of the US Federal Reserve, underscored the Federal Reserve’s intent to continue its current QE program and ultra-low interest rates. Yellen said that she hoped that the low interest rates would facilitate a “return to prudent risk-taking”. The current round of QE involves the purchase of $85 billion in assets each month, and critics have expressed the fear that this could lead to “asset bubbles”. However, both Fed Chair Bernanke and Yellen have argued that the benefits of a stronger recovery outweigh any such risks. Defending the Fed’s asset purchases, Yellen cited a study which found that when the central bank purchases $500 billion in bonds, unemployment drops a quarter of a percentage point within three years. Yellen’s remarks come on the heels of Bernanke’s testimony on Capitol Hill, where he also defended the Fed’s monetary policy.


USD/JPY for Tuesday, March 5, 2013

Forex Rate Graph Thursday, February 14, 2013

USD/JPY March 5 at 11:45 GMT

USD/JPY 93.09 H: 93.51 L: 92.91


S3 S2 S1 R1 R2 R3
91.30 91.94 92.53 93.14 94.59 95.27


In Tuesday trading, USD/JPY has been quiet. The pair is currently testing the 93.14 line, which saw action earlier in the day. The next line of resistance is at 94.59. On the downside, the line of 92.53 is providing support. This is followed by strong support level at 91.94.

  • Current range: 92.53 to 93.14


Further levels in both directions:

  • Below: 92.53, 91.94, 91.30, 90.91 and 90.18
  • Above: 93.14, 94.59, 95.27, 96.02 and 97.52


OANDA’s Open Position Ratios

The USD/JPY ratio continues to show little movement. This lack of activity is reflected in the currency pair, which has been subdued in Tuesday trading. We can expect the pair to get busier, and traders should monitor the ratio for signs of activity.

USD/JPY is currently keeping a low profile, but the markets are expecting further monetary easing from the Bank of Japan. Japanese releases still point to deflation, and the yen is likely to lose more ground as the government and BOJ try to kick-start the Japanese economy. 


USD/JPY Fundamentals

  • 1:30 Japanese Average Cash Earnings. Estimate -0.3%. Actual 0.7%.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 55.0 points.
  • 15:00 US IBD/TIPP Economic Optimism. Estimate 47.8 points.


*Key releases are highlighted in bold

*All release times are GMT

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.
Kenny Fisher

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