USD/JPY – Yen Choppy Ahead of Manufacturing Data

USD/JPY has shown movement in both directions on Wednesday but is almost unchanged on the day. In the European session, the pair trades in the mid-119 range. The yen has recovered much of last week’s losses, having gained over 200 points since the start of the week. In Japan, Consumer Confidence slipped to 37.7 points. Later in the day, we’ll see the release of Core Machinery Orders and Tertiary Industry Activity. There are no major events out of the US on Wednesday.

The Japanese economy is clearly in trouble, as Final GDP contracted in the third quarter by 0.4%. The second quarter reading was downgraded to -1.9%, compared to the original forecast of -1.6%. These numbers reiterate the Preliminary GDP data back in November, which showed a second straight quarter of decline, indicating recession. Another ominous sign is that consumer confidence indicator continues to weaken. The Japanese consumer is less optimistic, as Consumer Confidence softened for a fourth straight month, falling to 37.7 points.

US employment data has rebounded in impressive fashion and the good news continued on Tuesday, as JOLTS Job Openings climbed to 4.83 million, up from 4.74 million a month earlier. This beat the estimate of 4.81 million. On Friday, Nonfarm Payrolls shot up to 321 thousand in November, stunning the markets which had expected a rise of 231 thousand. There was also a rise in wages, which should translate into stronger inflation numbers. The unemployment rate held steady at 5.8%, matching the forecast. The excellent Nonfarm Payrolls should help allay concerns about whether the economy can weather an expected rate increase in 2015.

USD/JPY for Wednesday, December 10, 2014

USD/JPY December 10 at 12:35 GMT

USD/JPY 119.22 H: 119.91 L: 118.69

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
116.66 117.94 118.69 119.63 120.63 121.39

 

  • USD/JPY tested resistance at 119.63 in the Asian session but then retracted. The pair is stable in European trade.
  • 118.69 is an immediate support line.
  • 119.63 remains under pressure. 120.63 is stronger.
  • Current range: 118.69 to 119.63

Further levels in both directions:

  • Below: 118.89, 117.94, 116.66 and 114.57
  • Above: 119.63, 120.63, 121.39, 122.18 and 123.35

 

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged on Wednesday. This is consistent with what we’re seeing from the pair, which is almost unchanged over the day. The ratio has a majority of long positions, indicative of trader bias towards USD/JPY gaining ground.

USD/JPY Fundamentals

  • 5:00 Japanese Consumer Confidence. Estimate 39.6 points. Actual 37.7 points.
  • 15:30 US Crude Oil Inventories. Estimate -2.6M.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate -68.3B.
  • 23:50 Japanese Core Machinery Orders. Estimate -2.1%.
  • 23:50 Japanese Tertiary Industry Activity. Estimate -0.1%.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.