USD/JPY – Yen Steady at Start of Week

The Japanese yen has edged lower on Monday, as the pair trades in the high-101 range late in the European session. It’s a quiet schedule on Monday, with no major releases. In Japan, today’s sole event is the BOJ Monthly Report. In the US, there was good news as the Empire State Manufacturing Index posted another strong reading. Capacity Utilization Rate and Industrial Production met expectations.

There were no surprises from the BOJ, which released a policy statement on Friday. The central bank said expansion of the monetary base would continue at its current level of JPY 60-70 trillion per year. This follows remarks from BOJ Governor Haruhiko Kuroda last week, who noted that the easing measures have led to the economy moving in the right direction. However, the monetary moves have hurt the yen, which continues to trade at very high levels against the dollar, and this trend is likely to continue.

Japanese manufacturing numbers have been brutal in the month of May. There was more bad news on Thursday, as Core Machinery Orders fell by 9.1%, after a very strong gain a month earlier. However, this was slightly better than the estimate of -11.5%. The Manufacturing Index and Tertiary Industry Activity also slumped, pointing to serious trouble in the Japanese manufacturing sector. There was much better news to start off the week, as Final GDP soared 1.6% in Q1, a huge improvement from the weak gain of 0.2% in Q4. Current Account also looked sharp, posting a surplus for the first time since September. These strong numbers have reinforced the BOJ’s contention that the improving economy will be able to weather the sales tax hike which took effect in April.

The US ended a rough week on a sour note, as inflation and consumer confidence numbers missed their estimates. PPI, a key gauge of inflation in the manufacturing sector, came in at -0.2%, its worst reading since October. The estimate stood at 0.1%. Preliminary UoM Consumer Sentiment also lost ground, falling to 81.3 points, short of estimate of 83.3. However, with only one reading this year below the 80-point level, US consumer confidence remains at high levels.

Thursday’s key US events were a major disappointment, as retail sales and employment numbers were weak. Retail Sales came in at 0.3%, short of the estimate of 0.5%. Core Retail Sales could only muster a gain of 0.1%, shy of the forecast of 0.4%. Unemployment Claims, one of the most important economic indicators, rose to 317 thousand, missing market expectations of 306 thousand.

USD/JPY for Monday, June 16, 2014

USD/JPY June 16 at 13:20 GMT

USD/JPY 101.89 H: 101.98 L: 101.72

USD/JPY Technical

• USD/JPY has posted modest losses on Monday.
• On the upside, 102.53 is the next resistance line. This followed by resistance at 103.07, which has held firm since early April.
• 101.19 continues to provide support.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.97
• Above: 102.53, 103.07, 104.17 and 105.70

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Monday. This is consistent with the movement of the pair, as the US dollar has posted slight losses. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar reversing directions and moving higher.

USD/JPY is trading in the low-101 range. The pair is unchanged late in the European session.

USD/JPY Fundamentals

• 5:00 BOJ Monthly Report.
• 12:30 US Empire State Manufacturing Index. Estimate 15.2 points. Actual 19.3 points.
• 13:00 US TIC Long-Term Purchases. Estimate 41.3 B. Actual -24.2B.
• 13:15 US Capacity Utilization Rate. Estimate 78.9%. Actual 79.1%.
• 13:15 US Industrial Production. Estimate 0.6%. Actual 0.6%.
• 14:00 US NAHB Housing Market Index. Estimate 47 points.

*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.