USD/JPY is steady in Thursday trading, as the pair trades in the high-98 range. In economic news, Japanese Leading Indicators came in as expected. The markets will be keeping a close eye on Current Account, which will be released later on Thursday. In the US, it’s been a quiet week, with today’s Unemployment Claims the only key event this week.
USD/JPY has enjoyed an uneventful week, as the pair continues to trade at high levels. The pair has come very close to the magic 100 line on two occasions, only to retract to lower territory. Recent Japanese inflation releases continue to point to deflation in the economy, despite the best efforts of the BOJ to create some inflation. This has fuelled expectations that the BOJ will resort to further easing measures, as Prime Minister Abe and BOJ Governor Kuroda have stated very clearly that they will do whatever is needed to stamp out deflation, which has hobbled the Japanese economy for years. So we can expect the yen to continue to lose ground against the US dollar.
In China, Wednesday’s Trade Balance numbers looked sharp. After a rare deficit in the April reading, China reported a surplus of $18.2 billion in the May release. This beat the estimate of $15.5 billion, and was the best showing since February. However, traders should treat China’s trade data with caution, as the figures could be inflated to mask capital inflows into the country. Analysts have noted that a weak global economy has led to less demand for Chinese experts, so the figures being released by Chinese officials may not be accurate.
ECB head Mario Draghi continues to be in the spotlight following the ECB’s dramatic rate cut. Earlier this week, Draghi said that last week’s cut was taken due to the continuing slowdown in the Eurozone, and urged Eurozone countries to take the necessary steps to get their fiscal houses in order. Draghi repeated that the ECB was open to further rate cuts, as well as lowering its deposit rates below zero. When he mentioned the latter point last week, the euro took a dive, but this time, the markets did not react. However, not all policymakers favor further rate reductions. Yves Mersch, an ECB board member, stated that interest rate cuts have limits to their effectiveness, and that the ECB had other tools to help revive the Eurozone.
USD/JPY for Thursday, May 9, 2013
USD/JPY May 9 at 10:20 GMT
USD/JPY 98.70 H: 99.15 L: 98.58
USD/JPY is showing little change on Thursday, following a trend which we have seen for most of the week. On the downside, the pair continues to receive support at 98.45. This is a weak line, and it could face pressure if the yen shows any improvement. The next support level is at 97.24. The pair faces strong resistance at 99.57. This is followed by resistance at the all-important 100 line.
- 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 and 101.81
OANDA’s Open Positions Ratio
USD/JPY continues to show little change. This is reflected in what we are seeing from the pair, which has continues to stay close to the 99 line. Traders should continue to monitor the ratio, as renewed movement could be an early indication that USD/JPY will break out of its narrow range.
With only a few fundamental releases this week, USD/JPY has had an uneventful week, showing little activity. However, we could see some action from the pair later, as there are two key releases on the schedule – US Unemployment Claims and Japanese Current Account.
- 5:00 Japanese Leading Indicators. Estimate 97.7%. Actual 97.6%.
- 12:30 US Unemployment Claims. Estimate 333K.
- 14:00 US Wholesale Inventories. Estimate 0.3%.
- 14:00 US Mortgage Delinquencies. Actual 7.25%.
- 14:30 US Natural Gas Storage. Estimate 80B.
- 17:00 US 30-year Bond Auction.
- 23:50 Japanese Current Account. Estimate 0.48T.
- 23:50 Japanese Bank Lending.
*Key releases are highlighted in bold
*All release times are GMT
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