USD/JPY – Yen Can’t Shake Off 104 Line

USD/JPY has edged lower, as the pair trades in the high-103 range on Wednesday. In the US, there is just one event on the calendar, Crude Oil Inventories. There are no Japanese releases on Wednesday.

Japanese inflation levels continue to post strong numbers, as the fight against deflation has emerged as one of the government’s economic success stories. The Services Producer Price Index, which measures corporate inflation, posted a sharp gain of 3.7%, after two straight gains of 3.6%. The markets are expecting more positive news from additional inflation indicators on Thursday. Strong data could help the shaky yen, which continues to trade close to the 104 line.

US durables painted a mixed picture on Tuesday. Core Durable Goods Orders, a key indicator, came in at -0.8%, its worst showing in 2014. This was nowhere near the estimate of +0.5%. At the same time, Durable Goods Orders stunned the markets with a record gain of 22.6%. The reason? A huge increase in the purchase of passenger planes in July. The sharp jump did not have much effect on the dollar, and the indicator is expected to return to normal levels next month.

There was some speculation that the recent economic meeting in Jackson Hole might be a market-mover, so the markets were all ears as Fed chair Janet Yellen delivered the keynote address on Friday. Any hopes for some dramatic news were dashed, however, as Yellen did not provide any clues as to the timing of a rate hike. She reiterated that the US job market still needed to improve, so employment numbers remain a crucial factor in any rate move by the Fed. There is divergence in monetary stance between the ECB and the BOJ on the one hand and the Federal Reserve on the other. The Fed is close to winding up QE, while the BOJ may step in and provide stimulus to the Japanese economy.

USD/JPY for Wednesday, August 27, 2014

USD/JPY August 27 at 12:10 GMT

USD/JPY 103.89 H: 104.16 L: 103.86

USD/JPY Technical

• USD/JPY moved lower in the Asian session, dropping below the 104 line. The pair is unchanged in the European session.
• 103.07 is providing strong support.
• On the upside, 104.17 is under pressure and could break during the day. There is stronger resistance at 105.44.
• Current range: 103.07 to 104.17

Further levels in both directions:

• Below: 103.07, 102.53, 101.19 and 100
• Above: 104.17, 105.44, 107.68 and 108.57

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged on Wednesday. This is not consistent with the pair’s movement, as the yen has posted gains. The ratio has a majority of short positions, indicative of trader bias towards the yen continuing to gain ground.

USD/JPY Fundamentals

•  14:30 US Crude Oil Inventories. Estimate 1.1M.

*Key releases are highlighted in bold

*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.