USD/JPY – Rangebound Ahead of Key US Numbers

USD/JPY is steady in Friday trading, as the pair trades in the mid-104 range in the European session. In economic news, Japanese Consumer Confidence weakened in December and fell short of the estimate. On Thursday, US Unemployment Claims met expectations with another strong release, while the Philly Fed Manufacturing Index hit a three-month high. However, Core CPI looked weak, posted a gain of 0.1%. On Friday, the US releases more key data, with Building Permits, Preliminary UoM Consumer Sentiment and JOLTS Job Openings wrapping up the week.

Japanese manufacturing and inflation numbers looked solid on Wednesday. Core Machinery Orders sparkled with a 9.3% gain, crushing the estimate of 1.2%. Tertiary Industry Activity bounced back after two straight declines, posting a gain of 0.6%. This was shy of the estimate of 0.8%. On the inflation front, Corporate Goods Price Index posted a healthy gain of 2.5%, easily beating the estimate of 0.4%. The yen shrugged off these strong numbers as USD/JPY remains listless.

US Unemployment Claims looked sharp, dropping slightly to 327 thousand, very close to the estimate of 326 thousand. This was welcome news after last week’s shocking Non-Farm Payrolls. With the Fed finally starting its taper of QE, every employment release will be under the market microscope. Meanwhile, the Philly Fed Manufacturing Index continues to move higher. The indicator jumped to 9.4 points, up from 7.0 points a month earlier. This strong reading beat the estimate of 8.8 points.

US retail sales numbers painted a mixed picture earlier this week. Retail Sales dropped sharply to 0.2%, down from 0.7% in November. However, this figure matched the forecast. Core Retail Sales took the opposite route, jumping to 0.7%, compared to 0.4% the month before. This easily beat the estimate of 0.4%. Consumer spending will need to pick up if the US recovery is to gain traction.

 

USD/JPY for Friday, January 17, 2014

Forex Rate Graph 21/1/13

USD/JPY January 17 at 11:15 GMT

USD/JPY 104.41 H: 104.47 L: 104.20

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
102.53 103.30 104.17 105.70 106.85 107.73

 

  • USD/JPY is showing little movement in Friday trading. The pair has been listless throughout the Asian and European sessions.
  • 104.17 continues to provide support. This is a weak line which could be face strong pressure if the dollar loses ground. This is followed by a strong support level at 103.30.
  • On the upside, 105.70 is the next line of resistance. This is followed by a resistance line at 106.85, which has remained intact since September 2008.
  • Current range: 104.17 to 105.70

 

Further levels in both directions:

  • Below: 104.17, 103.30, 102.53, 101.19 and 100.00
  • Above: 105.70, 106.85, 107.73 and 108.77

 

OANDA’s Open Positions Ratio

USD/JPY ratio has reversed positions in Friday trading and is pointing to gains in long positions. This is not reflected in what we are seeing from the pair, which is showing very little movement. Long positions have a majority in the USD/JPY ratio, indicating trader bias towards the dollar breaking out and resuming the rally we saw earlier in the week.

The pair is trading quietly in Friday trading. We could see some volatility from the pair in the North American session, as the US releases three key events later in the day.

 

USD/JPY Fundamentals

  • 5:00 Japanese Consumer Confidence. Exp. 43.4 points. Actual 41.3 points.
  • 13:30 US Building Permits. Exp. 1.01M.
  • 13:30 US Housing Starts. Exp. 0.99M.
  • 14:15 US Capacity Utilization Rate. Exp. 69.2%.
  • 14:15 US Industrial Production. Exp. 0.4%.
  • 14:55 US Preliminary UoM Consumer Sentiment. Exp. 83.4 points.
  • 14:55 US Preliminary UoM Inflation Expectations.
  • 15:00 US JOLTS Job Openings. Exp. 3.97M. 

 

*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

Currency Analyst at Market Pulse
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.