The Japanese yen continues to show limited movement this week, as USD/JPY trades slightly above the 107 line on Wednesday. On the release front, US inflation numbers remain weak, as Core CPI slipped to -0.2% last month. The Federal Reserve will release a statement following its policy meeting. In Japan, today’s sole event is Trade Balance. The markets are expecting little change in the deficit.
US inflation data was worse than expected on Wednesday. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.
The Federal Reserve will be in the spotlight on Wednesday, with the Fed expected to trim its QE scheme by another $10 billion at its policy meeting. At one time, the Fed was pumping up to $85 billion/month, but a strong recovery has allowed the Fed to steadily taper its asset purchases, and the QE program is expected to wind up in October. There is speculation that the Fed could use hawkish language in its statement, which would be bullish for the US dollar.
Scottish voters will cast their ballots in a referendum on independence on Thursday. The most recent polls are pointing to a close vote, with many voters still undecided. If voters do choose to secede from the UK, this would create plenty of questions and uncertainty, including what currency an independent Scotland would use and how the national debt would be divided. A vote to split up the UK could lead to turmoil in the markets and weigh heavily on the markets. Traders should treat the referendum as a market-mover, as a close vote could have negative repercussions for the markets.
USD/JPY for Wednesday, September 17, 2014
USD/JPY September 17 at 13:15 GMT
USD/JPY 107.28 H: 107.35 L: 107.14
- USD/JPY has been rangebound in the Asian and European sessions.
- 106.85 is an immediate support level. The next support line is 105.44.
- 107.68 remains a weak resistance line. 108.58 follows.
- Current range: 106.85 to 107.68
Further levels in both directions:
- Below: 106.85, 105.44, 104.17, 103.07 and 102.53
- Above: 107.68, 108.57, 109.82 and 110.68
OANDA’s Open Positions Ratio
USD/JPY ratio is pointing to gains in short positions on Wednesday, continuing the trend that has marked the ratio all week. This is not consistent with the pair’s movement, as the yen has posted small gains. The ratio has a majority of short positions, indicative of trader bias towards the yen reversing directions and moving higher.
- 12:30 US CPI. Estimate 0.1%. Actual -0.2%.
- 12:30 US Core CPI. Estimate 0.2%. Actual 0.0%.
- 12:30 US Current Account. Estimate -114B. Actual -99B.
- 14:00 US NAHB Housing Market Index. Estimate 56 points.
- 14:30 US Crude Oil Inventories. Estimate -0.9M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
- 23:50 Japanese Trade Balance. Estimate -0.99T.
*Key releases are highlighted in bold
*All release times are GMT
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