USD/JPY – Yen Rally Fizzles as Manufacturing Data Tumbles

USD/JPY has posted strong gains on Thursday, following strong gains by the yen for most of the week. In the European session, the pair is trading in the mid-118 range. The yen lost ground after Japanese Core Machinery Orders tumbled by 6.4%. As well, Tertiary Industry Activity disappointed with a reading of -0.2%. In the US, today’s major events include unemployment claims and retail sales. There are no Japanese releases on Thursday.

Japanese manufacturing took a downturn in October, as Japanese Core Machinery Orders swooned, posting a decline of 6.4%. This was the first decline since June, and was much worse than the estimate of -2.1%. Tertiary Industry Activity also disappointed with a drop of 0.2%, its second decline in three readings. The economy is clearly in trouble, as two consecutive quarters of negative growth mean that the country is officially in recession. Another ominous sign is that consumer confidence indicator continues to weaken. Not surprisingly, the Japanese consumer is less optimistic, as Consumer Confidence softened for a fourth straight month, falling to 37.7 points in November.

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 Thursday, December 11, 2014

USD/JPY December 11 at 12:00 GMT

USD/JPY 118.32 H: 118.88 L: 117.45

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
114.57 116.66 117.94 118.69 119.63 120.63

 

  • USD/JPY posted strong gains early in the Asian session, breaking above resistance at 117.94. The pair continued to post gains in European trade, testing resistance at 118.69. The pair has since retracted.
  • 117.94 has reverted to a support role as the dollar has pushed higher. The next support line is 116.66.
  • On the upside, 118.69 is under strong pressure. 119.63 is stronger.
  • Current range: 117.94 to 118.69

Further levels in both directions:

  • Below: 117.94, 116.66, 114.57 and 113.16
  • Above: 118.69, 119.63, 120.63, 121.39 and 122.18

 

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Thursday, resuming the trend we saw earlier in the week. This is not consistent with the pair’s movement, as the yen has posted losses. The ratio has a majority of long positions, indicative of trader bias towards USD/JPY gaining ground.

USD/JPY Fundamentals

  • 13:30 US Core Retail Sales. Estimate 0.1%.
  • 13:30 US Retail Sales. Estimate 0.4%.
  • 13:30 US Unemployment Claims. Estimate 299K.
  • 13:30 US Import Prices. Estimate -1.7%.
  • 15:00 US Business Inventories. Estimate 0.2%.
  • 15:30 US Natural Gas Storage. Estimate -45B.
  • 18:01 US 30-year Bond Auction.

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.