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USD/JPY – Yen Improves As Markets Eye BOJ Minutes

USD/JPY has lost ground on Tuesday, as the pair trades in the low-98 range in European trading. The Bank of Japan is in the spotlight today, as BOJ Governor Haruhiko Kuroda addressed an event in Osaka, and the minutes from the Bank’s most recent policy meeting will be released later on Tuesday. In the US, today’s highlight is ISM Non-Manufacturing PMI.

Speaking to a group of business leaders in Osaka, BOJ head Haruhiko Kuroda expressed confidence that the Bank would successfully reach its inflation target of 2.0% by 2015. However, many analysts are skeptical that this goal will be met, as National Core CPI rose just 0.7% in September. The yen’s drop of about 12% in 2013 has provided some inflation by increasing import prices, but growth has stalled and there is growing concerns that the country could be headed for an economic downturn, which would likely push down further on the weak yen. Analysts will be combing through the minutes of the Bank’s most recent policy minutes, which will be released late Tuesday.

The Federal Reserve met for a policy meeting last week, the first since Congress reached an agreement on the debt ceiling and the shutdown. As expected, the Fed said that it would maintain QE at current levels of $85 billion each month. However, the Fed’s policy statement was less dovish than expected, as the Fed noted that the economy was expanding “at a moderate pace” and left the door open for QE tapering in December. Still, the prevailing view in the markets is that short of a sharp turnaround in US numbers, QE tapering will be on hold until early 2014.

After a host of weak numbers, US numbers showed some improvement late last week. Unemployment Claims practically matched the forecast, and ISM Manufacturing PMI beat the estimate. With the Fed unlikely to taper QE before 2014, the QE uncertainty which was has been weighing on the dollar has eased, and the dollar could  post gains against the weak Japanese yen.

 

USD/JPY for Tuesday, November 5, 2013

Forex Rate Graph 21/1/13

USD/JPY November 5 at 12:30 GMT

USD/JPY 98.33 H: 98.64 L: 98.17

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
96.00 97.18 98.15 98.92 100.00 101.19

 

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains by long positions in Tuesday trading. This is not reflected in the current movement of the pair, as the yen has posted gains against the dollar. The ratio continues to be dominated by long positions, indicative of a strong trader bias towards the US dollar moving higher.

The pair is trading in the low-98 range, as the yen has posted gains on Tuesday. We could see some further movement of the pair in the North American session, as the US releases key services data later in the day.

 

USD/JPY Fundamentals

 

*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 [4]

Currency Analyst at Market Pulse [5]
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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