USD/JPY – Steady As Markets Eye BOJ Minutes

USD/JPY has posted slight gains on Tuesday, as the pair has moved back above the 102 line. On the release front, US Building Permits softened in May but CPI releases beat their estimates. In Japan, the BOJ will release the minutes of its monetary policy meeting and we’ll get a look at Japanese Trade Balance. The markets are expecting the trade deficit to widen in May.

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. The BOJ releases the minutes of this meeting later on Tuesday, and this event is unlikely to affect USD/JPY unless there is some surprising information in the minutes.

The news out of the US was mixed on Tuesday. Building Permits dropped to 0.99M, well below the estimate of 1.07M. On the inflation front, CPI moved up modestly, posting a gain of 0.3%. This was the strongest gain we’ve seen since January 2013. CPI followed suit, climbing to an eleven-month high. The index rose to 0.4%, beating the estimate of 0.2%.

The markets are keeping a close eye on the US Federal Reserve, which issues a policy statement on Wednesday, with the markets expecting another $10 billion trim to QE, which would reduce the asset purchase program to $35 billion/month. Fed chair Janet Yellen is not expected to provide any time guidelines about a rate hike, so traders shouldn’t expect a repeat of the fireworks we saw with the British pound, which soared following comments about a possible rate hike by BOE Governor Mark Carney.

USD/JPY for Tuesday, June 17, 2014

USD/JPY June 17 at 13:00 GMT

USD/JPY 102.14 H: 102.19 L: 101.87

USD/JPY Technical

• USD/JPY has posted modest gains on Tuesday.
• 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 strong 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 long positions on Tuesday. This is consistent with the movement of the pair, as the US dollar has posted slight gains. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar continuing to move higher.

USD/JPY is trading above the 102 line. The pair has edged higher in the European session.

USD/JPY Fundamentals

• 12:30 US Building Permits. Estimate 1.07M. Actual 0.99M.
• 12:30 US Core CPI. Estimate 0.2%. Actual 0.3%.
• 13:00 US CPI. Estimate 0.2%. Actual 0.4%.
• 13:15 US Housing Starts. Estimate 1.04M.
• 23:50 BOJ Monetary Policy Meeting Minutes.
• 23:50 Japanese Trade Balance. Estimate -1.01T.

*Key releases are highlighted in bold

*All release times are GMT

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