USD/JPY – Modest Gains in Thin Holiday Trade

The Japanese yen is showing little movement in Tuesday trade, as USD/JPY trades in the mid-102 range in the European session. The markets are keeping an eye on two key events in the US today. Incoming Federal Reserve Chair Janet Yellen will testify about the Fed’s Semiannual Monetary Policy Report before the House Financial Services Committee. We’ll also get a look at JOLT Job Openings. The key employment release has been moving higher in recent readings, and the markets are expecting the upward trend to continue in the January release. Japanese markets are closed for a holiday, so there are no Japanese releases on Tuesday.

Incoming Federal Reserve Chair Janet Yellen took over the reins of the Fed last week, and heads to Congress on Tuesday to present her first semi-annual testimony in front of the House Financial Services Committee. She is expected to reiterate the Fed’s plan to continue its taper of QE and wind up the stimulus program by the end of the year, despite recent weakness in the economy and some worrying NFP numbers. Traders should be prepared for some fluctuation from EUR/USD following Yellen’s remarks.

Japanese releases failed to impress at the start of the week. The current account deficit grew to -0.20 trillion yen, higher than the estimate of -0.06 trillion. Current Account is closely linked to currency demand, and a higher deficit means reduced purchases of yen by foreigners for Japanese goods and services. Consumer Confidence weakened for a second straight month and dropped to 40.5 points, well off the estimate of 43.9 points. This was the indicator’s lowest level since December 2012. Economy Watchers Sentiment also dropped in January, while Bank Lending matched the forecast.

On Friday, the markets were treated to another disappointing Nonfarm Payrolls release. The key employment indicator improved to 113 thousand, but this was well of the estimate of 185 thousand. The fact that the euro was unable to post gains against the dollar on Friday point to the high regard the markets have for the strength of the US economy. There was some good news as well on the employment front, as the Unemployment Rate dipped to 6.6%, its lowest level in over five years. The markets are keeping a close eye on JOLT Job Openings, which will be released later on Tuesday.

USD/JPY for Tuesday, February 11, 2014

USD/JPY February 11 at 13:20 GMT

USD/JPY 102.50 H: 102.57 L: 102.07

USD/JPY Technical

• USD/JPY has posted modest gains in Monday trading as it trades slightly above the 102 line.
• The pair is testing resistance at 102.53. This line could break during the day. This is followed by resistance at 103.30.
• On the downside, 101.19 has some breathing room as the pair has edged higher. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Tuesday trading. This is not consistent with what we are seeing from the pair, as the yen has posted slight gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar moving to higher ground.

The yen is trading in the mid-102 range and has posted slight gains in the European session. We could see some stronger activity in the North American session, as Fed chair Janet Yellen testifies before Congress and the US releases key employment data later in the day.

USD/JPY Fundamentals

• 12:30 US NFIB Small Business Index. Exp. 93.6 points. Actual 94.1 points.
• 14:00 US FOMC Member Charles Plosser Speaks.
• 15:00 US Fed Chair Janet Yellen testifies before the House Financial Services Committee.
• 15:00 US JOLTS JOB Openings. Exp. 4.04M.
• 15:00 US Wholesale Inventories. Exp. 0.5%.

*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.