USD/JPY has shown little activity this week, and we’re seeing more of the same on Wednesday, as the pair trades in the low-102 range in the European session. On the release front, there are only two US releases on the schedule, highlighted by New Home Sales. There are no Japanese releases on Wednesday.
Is the US housing sector experiencing a downturn? Recent US numbers have not looked sharp, and the weak numbers are being felt in the housing industry. Building Permits slid to a five-month low in January, dropping to 0.94 million. The estimate stood at 0.98 million. Existing Home Sales looked awful, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales, which will be released on Wednesday.
There were no surprises from the BOJ minutes last week, as the central bank reiterated that the economy was growing at a moderate pace and it planned to continue its current monetary policy. The BOJ did note that it needed to be clear that its stimulus program could last more than two years. The central bank has said in the past that it was aiming to reach a level of 2% inflation within two years, but it does not want to be hamstrung by any deadlines, and said that quantitative and qualitative easing will continue as long as required. The BOJ’s estimate for GDP in fiscal 2013 remains unchanged at 2.7%, while the outlook for fiscal 2014 was lowered to 1.4% from 1.5%. On the inflation front, the forecast for fiscal 2013 is 0.7%, jumping to 3.3% in fiscal 2014. Earlier in the week, Japanese inflation numbers did not impress, as the Corporate Services Price Index posted a gain of 0.8%, well below the estimate of 1.2% and its weakest gain in three months.
USD/JPY for Wednesday, February 26, 2014
USD/JPY February 26 at 13:50 GMT
USD/JPY 102.38 H: 102.41 L: 102.14
- USD/JPY is drifting in Wednesday trading. The pair edged higher in the Asian session and is steady in European trading.
- On the upside, 102.53 remains under pressure and could be tested during the day. There is stronger resistance at 103.30.
- 101.19 is providing support. 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 Wednesday trading. This is not consistent with what we are seeing from the pair, as the yen has posted modest gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar posting gains against the yen.
The yen continues to show little movement. The pair is almost unchanged in the European session.
- 15:00 US New Home Sales. Exp. 406K.
- 15:30 US Crude Oil Inventories. Exp. 1.1M.
*Key releases are highlighted in bold
*All release times are GMT
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