USD/JPY – Little Movement As US Markets Take Holiday

USD/JPY is listless as we start the new trading week. The pair is trading in the low-104 range in the Monday European session. In economic news, On Friday, US construction and employment data met expectations, but consumer confidence dipped. Monday’s trade will be light, as US markets are closed for the Martin Luther King holiday.  There was just one Japanese release on  Monday. Revised Industrial Production slipped and posted a decline of 0.1%.

Last week ended on a busy note in the US, which saw the release of three key events. Building Permits showed little change, coming in at 0.99 million, shy of the estimate of 1.01 million. JOLTS Job Openings rose to 4.00 million, increasing from 3.93 million a month earlier. This beat the estimate of 3.97 million, and was welcome news from the employment front after the recent dismal Non-Farm Payrolls release. UoM Consumer Sentiment dropped to 80.4 points, down from 83.5 in the previous release. This was well below the estimate of 83.4, but a reading over the 80 line is certainly respectable.

Weak inflation levels remain a major concern in the US, as persistently low inflation is an indication of an underperforming economy. This was underscored by Core CPI, which posted a weak gain of just 0.1% in December. Producer Price Index posted a gain of 0.4%, reversing directions after three consecutive declines. Last week, Chicago Fed President Charles Evans said that the low rate of U.S. inflation is “both puzzling and worrisome,” and enough reason to maintain low interest rates, even if the employment picture continues to brighten. Analysts will be listening closely as to whether incoming Fed chair Janet Yellen shares these sentiments. Yellen takes over the helm of the Federal Reserve on February 1st.

Japanese manufacturing and inflation numbers looked solid last week. 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 and continues to trade at high levels.

 

USD/JPY for Monday, January 20, 2014

Forex Rate Graph 21/1/13

USD/JPY January 20 at 11:20 GMT

USD/JPY 104.19 H: 104.26 L: 103.87

 

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 Monday trading. The pair dropped below the 104 line early in the Asian session but has bounced back into 104 territory.
  • The pair is testing support at 104.17 and this line saw activity earlier in the day. 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 is pointing to gains in short positions in Monday trading. This is reflected in what we are seeing from the pair, as the dollar has edged lower. Long positions have a majority in the USD/JPY ratio, indicating trader bias towards the dollar gaining ground.

The pair is showing limited movement in Monday trading. With US markets closed for a holiday, it could be a quiet North American session.

 

USD/JPY Fundamentals

  • 4:30 Japanese Revised Industrial Production. Exp. 0.1%. Actual 0.1%.

 

*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.