The major currencies are in a holding pattern on Wednesday, ahead of today’s US Federal Reserve’s policy statement. USD/JPY is no exception, trading at the low-102 range. In economic news, the Bank of Japan released its monetary policy meeting minutes. Japanese Current Account remained steady in May, easily beating the estimate. In the US, the Fed is in the spotlight, with a policy statement and a follow-up press conference. There are no Japanese releases on Wednesday.
All eyes are on the Federal Reserve on Wednesday, as the US central bank will release a policy statement later in the day. The Fed is expected to trim its QE program by another $10 billion, which would reduce the asset purchase scheme to $35 billion/month. The big question is when the Fed will raise interest rates, but Fed chair Janet Yellen is unlikely to shed much light on that issue. If, as expected, QE is wound up in 2014, we could see a rate hike in the first half of 2015. However, cuts to QE are dependent on the health of the US economy, which continues to move in the right direction, despite some bumps in the road.
There were no surprises from the BOJ minutes, which showed that the BOJ planned to continue expansion of the monetary base 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 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%.
USD/JPY for Wednesday, June 18, 2014
USD/JPY June 18 at 12:05 GMT
USD/JPY 102.21 H: 102.31 L: 102.12
- USD/JPY is showing little movement on Wednesday.
- 102.53 is a weak 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 unchanged in Wednesday trade. This is consistent with the movement of the pair, which is not showing much movement. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar breaking out and moving higher.
USD/JPY is trading slightly above the 102 line. The pair is unchanged in the European session.
- 12:30 US Current Account. Estimate -96B.
- 14:30 US Crude Oil Inventories. Estimate -0.6M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Fund Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
*Key releases are highlighted in bold
*All release times are GMT
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