USD/JPY – Yen Remains Close to 119 Line

The Japanese yen is trading quietly on Monday, as USD/JPY trades at 119.42 early in the North American session. There are no Japanese releases on Monday. In the US, today’s sole economic event was NAHB Housing Market Index. The indicator, which measures sentiment amongst US homebuilders rose to 64 points in October, its highest level in 10 years. Traders should keep an eye on US Building Permits, a market-mover which will be released on Tuesday.

US key releases on Friday were a mixed bag. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.

Meanwhile, US manufacturing numbers in October were dismal. The Empire State Manufacturing Index posted its third straight decline, coming in at -11.4 points, missing the forecast of -7.3 points. The Philly Fed Manufacturing Index, a key release, came in at -4.5 points, shy of the estimate of -1.8 points. These figures point to contraction in the US manufacturing sector, which continues to suffer from weak global demand.

US Federal Reserve policymakers continue to be divided on the question of a rate hike in 2015. This was underscored last week by FOMC member Lael Brainard, who stated that the Fed should not raise rates before global economic conditions improve. Brainard noted that the Chinese slowdown has caused economic turmoil worldwide, and the US economy could lose steam due to weaker exports and weak global economic conditions. On the other end of the spectrum, another member of the FOMC, Dennis Lockhart, sounded more optimistic about a rate hike before the end of 2015. Lockhart did not rule out a rate hike in October, and added that the Fed would have more data to evaluate before its December policy meeting. With FOMC members sending out such conflicting messages, exasperated markets have been unable to get a handle on the timing of a rate hike, and this failure of the Fed to communicate a clear message continues to lead to uncertainty in the markets.

USD/JPY Fundamentals

Monday (Oct. 19)

• 14:00 Fed FOMC Member Lael Brainard Speaks.
• 14:00 NAHB Housing Market Index. Estimate 62 points. Actual 64 points.
• 16:00 Fed FOMC Member Jeffrey Lacker Speaks.

Upcoming Releases

Tuesday (Oct. 20)

• 8:30 US Building Permits. Estimate 1.16M

USD/JPY for Monday, October 19, 2015

USD/JPY October 19 at 14:15 GMT

USD/JPY 119.30 H: 119.61 L: 119.42

USD/JPY Technical

• USD/JPY has not shown much movement during the day.
• 118.53 is an immediate support level.
• 120.40 is the next line of resistance.
• Current range: 118.53 to 120.40

Further levels in both directions:

• Below: 118.53, 116.90, 115.90 and 113.86
• Above: 120.40, 121.50, 122.40 and 123.74

OANDA’s Open Positions Ratio

USD/JPY ratio continues to show a solid majority of long positions (62%), indicative of trader bias towards the US dollar moving to higher ground.

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.