USD/JPY – Dollar Pushes Past 119 as Japanese Data Dips

USD/JPY has gained close to 100 points on Tuesday, as the pair trades above the 119 line. Is the pair headed for the 120 level? On the release front, Japanese Average Cash Earnings fell to 0.5% in October, missing expectations. In the US, there are no major releases. Federal Reserve Chair Janet Yellen will deliver remarks at an event in Washington.

The Japanese yen continues its disappearing act, as the currency is trading above  the 119 line. The yen lost ground on a weak report from Average Cash Earnings, which slipped to 0.8% in October, short of the forecast of 0.5%. The softer reading points to less disposable income for the Japanese worker, which means a drop in spending. On Monday, the Moody’s rating agency downgraded Japan’s debt from Aa3 to A1, citing “heightened uncertainty” over the ability of the government to reduce the debt. The downgrade is seen as a response to Prime Minister Abe’s decision to delay a sales tax hike and the negative GDP reading, which means that the country is officially in a recession.

The US manufacturing sector continues to expand, as ISM Manufacturing PMI remained strong in November. The index came in at 58.7 points, close to the previous release of 59.0 points, which marked a three-year high. The positive US manufacturing data stands in sharp contrast to the situation in the Eurozone and China. In the Eurozone, manufacturing PMIs in France, Germany and Italy contracted in November. In China, the world’s second largest economy, Manufacturing PMI edged down to 50.3 points, down from the previous reading of 50.8 points.

USD/JPY for Tuesday, December 2, 2014

USD/JPY December 2 at 13:40 GMT

USD/JPY 119.21 H: 119.28 L: 118.22

USD/JPY Technical

• USD/JPY posted gains late in the Asian session. The pair continues to move higher in European trade and broke above resistance at 118.89.
• 118.89 has reverted to a support role as the yen has sustained sharp losses. 117.94 is stronger.
• 119.93 is the next resistance line.
• Current range: 118.89 to 119.93

Further levels in both directions:

• Below: 118.89, 117.94, 116.66, 115.75 and 114.65
• Above: 119.83, 120.63, 121.39 and 122.18

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Tuesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the yen has posted sharp losses. The ratio has a majority of long positions, indicative of trader bias towards the dollar continuing to move to higher ground.

USD/JPY Fundamentals

• 1:30 Japanese Average Cash Earnings. Estimate 0.8%. Actual 0.5%.
• 3:45 Japanese 10-year Bond Auction. Estimate 0.47%.
• 13:10 US FOMC Member Stanley Fischer Speaks.
• 13:30 US Fed Chair Janet Yellen Speaks.
• 15:00 US Construction Spending. Estimate 0.6%.
• All Day – US Total Vehicle Sales. Estimate 16.6M.
• 17:00 US FOMC Member Lael Brainard Speaks.

*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.