USD/JPY – Yen Starts Week Above 103

USD/JPY remains at high levels, as the pair trades above the 103 line in Monday trading. The yen did not get any help from Monday’s Japanese releases, as Current Account and Final GDP missed their estimates. Later in the day, we’ll get a look at two important manufacturing indicators, BSI Manufacturing Index and Tertiary Industry Activity. In the US, Monday’s only event is a speech by FOMC Member James Bullard on monetary policy in St. Louis. On Friday, US releases impressed, as Non-Farm Payrolls and the Unemployment Rate were sharp, while UoM Preliminary Consumer Sentiment hit a five-month high.

Japanese releases started the week on a sluggish note, as Current Account posted a second straight deficit. The November reading of -0.06 trillion yen pointed to a small deficit, but this was well below the estimate of a 0.12 trillion surplus. Meanwhile, Final GDP tumbled to 0.3%, down from 0.9%. This fell shy of the estimate of 0.4%, and marked a three-month low for the indicator. Japan will release manufacturing numbers later in the day, and the yen could lose ground if these readings do not meet market expectations.

In the US, employment numbers continue to impress. After another strong Unemployment Claims release, Non-Farm Payrolls was almost unchanged, coming in at 203 thousand. This was well above the estimate of 180 thousand. The Unemployment Rate dropped from 7.3% to 7.0%, beating the estimate of 7.2%. The strong numbers are sure to increase the pressure on the Fed to taper QE when its meets later in December. The Fed has said that a stronger employment picture is a prerequisite to tapering, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting.

USD/JPY for Monday, December 9, 2013

USD/JPY December 9 at 11:20 GMT

USD/JPY 103.08 H: 103.18 L: 102.89

USD/JPY Technical

• USD/JPY is steady in Monday trading. The pair has been trading close to the 103 line throughout the Asian and European sessions.
• 102.53 has reverted to a support role. This is followed by a support line at 101.19.
• 103.30 is providing resistance. This is a weak line which could face strong pressure if the dollar resumes its upward movement. This is followed by resistance at 104.17.
• 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 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Monday trading. This is reflected in the pair, which is showing very little movement. The ratio continues to be made up of a majority of long positions, reflecting a trader bias towards the dollar posting gains against the yen.

The pair is trading quietly above the 103 line. Japan will release two important manufacturing events during the North American session, and if these readings are not in line with market expectations, we could see some volatility from USD/JPY.

USD/JPY Fundamentals

• 5:00 Japanese Economy Watchers Sentiment. Estimate 52.3 points. Actual 53.5 points.
• 18:05 US FOMC Member James Bullard Speaks.
• 23:50 Japanese BSI Manufacturing Index. Estimate 17.2 points.
• 23:50 Japanese Tertiary Industry Activity. Estimate 0.3%.
• 23:50 Japanese M2 Money Stock. Estimate 4.3%.

*Key releases are highlighted in bold

*All release times are GMT

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