USD/JPY: Quiet As Markets Eye Key US Data

The Japanese yen is steady on Tuesday, as the pair trades just below the 102 level. On the release front, the only Japanese event is the Corporate Services Price Index, with another strong gain expected. In the US, it’s a busy day in the US, highlighted by CB Consumer Confidence and New Home Sales, the second key housing event this week.

Speaking at the International Economic Association in Jordan on Sunday, BOJ Governor Kuroda sounded upbeat about the Bank’s quantitative and qualitative easing policy, introduced in April 2013. Kuroda noted that growth had improved and deflation curbed, but that inflation was around 1%, well short of the target of 2%. The BOJ had hoped to reach its inflation target by 2015, but Kuroda acknowledged that this goal would take longer, and pledged that the BOJ would continue its current stance of large-scale monetary easing until the inflation target was reached.

There were no surprises last week from the Federal Reserve, which continued to taper its QE program.  The Fed reduced the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”.

USD/JPY for Tuesday, June 24, 2014

USD/JPY June 24 at 12:50 GMT

USD/JPY 101.92 H: 102.02 L: 101.82

USD/JPY Technical

• USD/JPY pushed above the 102 line early in the European session before retracting.
• 102.53 is the next resistance line. This is followed by resistance at 103.07, which has held firm since early April.
• 101.19 is providing 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 short positions on Tuesday, continuing the trend we saw a day earlier. This is not consistent with the movement of the pair, as the yen has posted slight gains. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar moving higher.

USD/JPY Fundamentals

• 1:35 Japanese Corporate Services Price Index. Estimate 3.2%.
• 14:00 US CB Consumer Confidence. Estimate 83.6 points.
• 14:00 US New Home Sales. Estimate 442K.
• 14:00 US Richmond Manufacturing Index. Estimate 6 points.
• 14:00 US Treasury Secretary Jack Lew Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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