USD/JPY – Yen Stable As Markets Eye US Major Releases

USD/JPY is trading in a narrow range on Friday, as the pair trades in the mid-99 range in the European session. Taking a look at economic news, US Unemployment Claims dropped sharply, but technical problems resulted in some claims not being processed. After just one major US release so far this week, the markets will be treated to four key events on Friday – Core Retail Sales, Retail Sales, PPI, and UoM Consumer Sentiment. In Japan, Revised Industrial Production bounced back in August with its best reading since February 2012.

US Unemployment Claims pointed to a sharp decline for the August release. However, a Department of Labor spokesman said that the drop was due to computer upgrades in two states, which meant that not all claims were processed. Even so, unemployment claims are looking positive. The four-week average, which is a less volatile gauge of unemployment claims, dropped to 321,000, its lowest level since 2007. If employment data continues to improve, we could see the Fed pull the tapering trigger sooner rather than later.

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

In Japan, it’s been a mixed week as far as economic releases. The week ended on a high, however, as Revised Industrial Production posted an impressive gain of 3.4% in August, compared to a decline of 3.1% in July. The estimate stood at 3.2%. Early in the week, the Bank of Japan released its minutes from its August policy meeting. The minutes show that BOJ policymakers are confident that the aggressive monetary stimulus program is succeeding in boosting the economy. The BOJ noted that wages and household incomes have increased a positive sign for increased consumer spending. Although the economy is improving, the public debt continues to balloon. The government is considering a sales tax increase in 2014, in order to reduce the debt. Such a step will not be popular, but will be easier for the government to introduce if the economy is improving.

USD/JPY for Friday, September 13, 2013

USD/JPY September 13 at 9:00 GMT

USD/JPY 99.69 H: 99.97 L: 99.54

USD/JPY Technical

• USD/JPY is showing little movement in Friday trading. The pair touched a high of 99.97 late in the Asian session but was unable to break through the 100 barrier.
• On the downside, the pair is receiving support at 99.45. This is a weak line could fall if the yen breaks out of the current narrow range. This is followed by support at 98.43.
• USD/JPY is facing weak resistance at the round number of 100. This is followed by stronger resistance at 100.85.
• Current range: 99.45 to 100

Further levels in both directions:

• Below: 99.45, 98.43, 97.83, 97.18 and 96.20
• Above: 100, 100.85, 101.66, 102.53 and 103.26

OANDA’s Open Positions Ratio

USD/JPY ratio continues to point to movement towards long positions in Friday trading. This is not reflected in the pair’s current movement, which is showing little movement. The ratio is made up of a solid majority of long positions, indicative of strong trader bias towards the dollar posting gains at the expense of the yen.

USD/JPY is treading softly in the mid-99 range. We could see some volatility from the pair during the day, with the US releasing four key events on Friday.

USD/JPY Fundamentals

• 4:30 Japanese Revised Industrial Production. Estimate 3.2%. Actual 3.4%.
• 12:30 US Core Retail Sales. Estimate 0.3%.
• 12:30 US Retail Sales. Estimate 0.5%.
• 12:30 US Core PPI. Estimate 0.2%.
• 12:30 US PPI. Estimate 0.2%.
• 13:55 US Preliminary UoM Consumer Sentiment. Estimate 82.6 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:00 US Business Inventories. Estimate 0.4%.

*Key releases are highlighted in bold

*All release times are GMT

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