USD/JPY – Limited Movement as Japanese Trade Balance, US Jobless Claims Improve

The Japanese yen continues to have a quiet week, as USD/JPY trades close to the 119 line on Thursday. Late Wednesday, the Japanese trade deficit narrowed to -0.41 trillion yen, well below the estimate. There are no major Japanese releases on Thursday. In the US, unemployment claims rebounded strongly, dropping to 283 thousand, down from 304 thousand in the previous release. Later in the day, we’ll get a look at the Philly Fed Manufacturing Index.

Japanese Trade Balance was unexpectedly strong in January, as the trade deficit dropped to 0.41 trillion yen, down from -0.71 trillion yen a month earlier. This marked the indicator’s strongest release since July 2012. The indicator was much stronger than expected, with the estimate standing at -0.95 trillion yen.

There were no surprises from the BOJ policy statement on Wednesday, as the central bank said that it would continue to increase base money by 80 trillion yen/year. With inflation sagging and well short of the BOJ’s 2% target, the central bank has little choice but to continue its accommodative monetary stance. The divergence with the Federal Reserve, which is expected to raise rates, will likely continue to weigh on the Japanese yen, which is again flirting with the symbolic 120 level.

On Wednesday, the Federal Reserve released the minutes of its previous policy meeting. The minutes were decidedly dovish in nature, as Fed policymakers raised concerns that a mid-year rate hike could hurt the economic recovery. The Fed also said it was worried about the impact of global events on the US economy, such as the slowdown in China and the Greek financial crisis. With US inflation at low levels, the Fed is not in any rush to raise rates, so speculation of a mid-year rate may have been premature.

USD/JPY for Thursday, February 19, 2015

USD/JPY February 19 at 13:35 GMT

USD/JPY 119.02 H: 119.09 L: 118.44

USD/JPY Technical

• USD/JPY was uneventful in the Asian session. The pair has posted modest gains in European trade.
• 118.69 is providing weak support. 117.49 is stronger.
• 119.83 is an immediate resistance line.
• Current range: 118.69 to 119.83

Further levels in both directions:

• Below: 118.69, 117.49, 116.69, 115.56 and 113.83
• Above: 119.83, 120.63, 121.69 and 122.19

OANDA’s Open Positions Ratio

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

USD/JPY Fundamentals

• 4:30 Japanese All Industries Activity. Estimate -0.2%. Actual -0.3%.
• 5:00 BOJ Monthly Report.
• 13:30 US Unemployment Claims. Estimate 293K. Actual 283 thousand.
• 15:00 US Philly Fed Manufacturing Index. Estimate 8.8 points.
• 15:00 US CB Leading Index. Estimate 0.4%.
• 15:30 US Natural Gas Storage. Estimate -110B.
• 16:00 US Crude Oil Inventories. Estimate -1.8M.

*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.