USD/JPY – Yen Edges Lower As Markets Eye Key US Releases

The Japanese yen has reversed directions on Wednesday and has posted modest losses against the US dollar. USD/JPY is trading in the mid-102 range in the European session. After a slow start to the week, there’s plenty of action out of the US on Wednesday, with four key events – ADP Non-Farm Employment Change, Trade Balance, ISM Non-Manufacturing PMI and Home Sales. There are no Japanese releases on Wednesday.

Earlier in the week, Bank of Japan Governor Haruhiko Kuroda said on Monday that he remained committed to the BOJ’s inflation target of 2% within two years. Although deflation has dramatically decreased, inflation indicators point to much lower inflation than the 2% level. Kuroda also said that the Bank’s ultra-loose monetary policy would continue until the inflation target was met. However, some policymakers don’t share Kuroda’s optimism that this ambitious goal will be achieved and the lack of consensus at the BOJ, as we saw in the minutes from the Bank’s last policy meeting, could weigh on the yen.

In the US, the markets will be keeping a close eye on this week’s employment releases, stating with the ADP Non-Farm Payrolls later on Wednesday. If US employment numbers continue to improve, the Federal Reserve is likely to take action and taper QE early next year. Unemployment Claims have looked sharp for the past two releases, and if the Non-Farm Payrolls and Unemployment Rate look solid this week, the US dollar could gain ground against the struggling Japanese yen.

USD/JPY for Wednesday, December 4, 2013

USD/JPY December 4 at 11:00 GMT

USD/JPY 102.57 H: 102.83 L: 102.24

USD/JPY Technical

• USD/JPY has posted modest gains in Wednesday trading. The pair hit a high of 102.83 early in the European session, but has edged lower.
• The pair continues to face resistance at 103.30. This is followed by a resistance line at 104.17, which has remained intact since October 2008.
• 102.53 is providing support. This is a weak line which could be tested during the day. This is followed by support at 101.19.
• Current range: 102.53 to 103.30

Further levels in both directions:

• Below: 102.53, 101.19, 100.00, 98.92 and 98.15
• Above: 103.30, 104.17, 105.70 and 107.27

OANDA’s Open Positions Ratio

USD/JPY ratio has reversed directions in Wednesday trading and is pointing to gains in long positions. This movement is reflected in the pair’s current movement, as the dollar has reversed directions and has posted gains against the yen. The ratio shows a majority of long positions, reflecting a trader bias towards the dollar continuing to move to higher ground.

The pair continues to trade at high levels, as USD/JPY trades in the mid-102 range. With the US releasing four key events later in the day, notably ADP Non-Farm Payrolls, we can expect some volatility from the pair during the North American session.

USD/JPY Fundamentals

• 13:15 US ADP Non-Farm Employment Change. Estimate 172K. 
• 13:30 US Trade Balance. Estimate -40.3B.
• 15:00 US ISM Non-Manufacturing PMI. Estimate 55.4 points.
• 15:00 US New Home Sales. Estimate 432K.
• Sep. Data – US New Home Sales. Estimate 427K.
• 15:30 US Crude Oil Inventories. Estimate -0.5M
• 16:20 President Barak Obama Speaks.
• 19:00 US Beige Book.

*Key releases are highlighted in bold

*All release times are GMT

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