The drive towards the magic 100 level stalled on Tuesday, as USD/JPY reversed direction and moved lower. The pair was trading in the high-98 range in the European session. In economic news, the markets will be hoping for some good news from US New Home Sales, after Existing Home Sales looked weak. Japan releases Corporate Services Price Index later on Tuesday. The indicator pushed into positive territory last month, with a small 0.1% gain. This was the first sign of inflation in the index since June 2012. However, the markets are not expecting good news in the upcoming reading, with an estimate of a 0.4% decline.
There has been plenty of talk about USD/JPY breaking the 100 level. Although the pair has come close, the three digit barrier remains elusive. The yen lost ground on Monday, as the G20 meeting, which wrapped up on Friday, did not censure Japan for its easing policies which have sent the yen plunging. Japanese officials were pleased with the outcome, as they feel there is now less pressure on the government to continue its easing policies, which will likely push the yen down even further. The Japanese currency has lost 20% of its value in the past six months, and most analysts believe it is only a matter of time before it falls below the 100 level.
What’s wrong with the US? The country’s economic releases continue to disappoint the markets, as last week’s key releases fell below expectations. Last week, there was more bad news, as employment and manufacturing numbers missed the mark. Unemployment Claims came in at 352 thousand, higher than the estimate of 349 thousand. The Philly Fed Manufacturing Index dropped from 2.0 points to 1.3 points, nowhere near the estimate of 2.7 points. This week started no better, as Existing Home Sales came in at 492 million, well off the estimate of 5.02 million. The markets are hoping that Tuesday’s housing numbers can do better.
USD/JPY for Tuesday, April 23, 2013
USD/JPY April 23 at 10:35 GMT
USD/JPY 98.66 H: 99.31 L: 98.52
USD/JPY has moved lower in Tuesday trading. The pair crossed below the 99 line in the Asian session. On the downside, 98.45 is providing weak support. This line could see activity if the yen continues to improve. The next support level is at 97.24. On the upside, there is resistance at 99.57. This is followed by resistance at the 100 level.
- Current range: 98.45 to 99.57
Further levels in both directions:
- Below: 98.45, 97.24, 96.03 and 95.27
- Above: 99.57, 100, 100.54, 101.81 and 102.57
OANDA’s Open Position Ratios
USD/JPY is pointing to movement in the direction of long positions. This activity is not reflected in the current trend of the pair, which has been downward, as the yen flexes some muscle. The activity in the ratio could be an early sign that the pair will undergo a correction and move higher.
USD moved close to the 100 level on Monday, but has since retracted. We could see more movement from the pair during the day, as the US releases key housing data.
- 13:00 US Flash Manufacturing PMI. Estimate. 53.8 points.
- 13:00 US HPI. Estimate 0.7%.
- 14:00 US New Home Sales. Estimate 416K.
- 14:00 US Richmond Manufacturing Index. Estimate 3 points.
- 23:50 Japanese Corporate Services Price Index. Estimate 0.4%.
*Key releases are highlighted in bold
*All release times are GMT
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