USD/JPY – US New Home Sales Nosedives, Yen Up Slightly

USD/JPY has posted slight losses on Monday, as the pair trades at the 121 line in the North American session. It’s a quiet start to the week, with only two events on the schedule. US New Home Sales plunged to 468 thousand in September, compared to an estimate of 546 thousand. Later on Monday, Japan releases the Services Producer Price Index, which measures inflation in the corporate sector. We’ll get a look at two market-mover events on Tuesday in the US – Core Durable Goods Orders and CB Consumer Confidence.

US data was positive late last week, as both housing data and unemployment claims beat expectations. Existing Housing Sales looked sharp in the September report, improving to 5.55 million, which was well above the estimate of 5.38 million. The news was much worse from New Home Sales, which slid to just 468 thousand, its lowest level in 10 months. The markets had expected a strong reading of 546 thousand. Unemployment Claims, a key release, came in at 259 thousand, beating the estimate of 266 thousand. This was slightly higher than the previous reading of 255 thousand, but marked the third straight week that the indicator beat the forecast. The four-week moving average of claims, which reduces the volatility of the weekly jobless reports, is currently at its lowest level since 1973. These figures point to a stronger labor market, but the next big test comes in early November, with the publication of Nonfarm Payrolls.

Recent US data has not been has strong as hoped, with key numbers sending a mixed message about the health of the economy. This has reduced the likelihood of a rate hike by the Federal Reserve before the end of 2015. The markets remain frustrated about the Fed’s lack of communication with the markets, as FOMC members continue to send out contradictory messages about the Fed’s plans. Still, an improvement in US numbers, especially employment and consumer indicators, could quickly revive speculation about a rate hike and boost the US dollar. Next week promises to be interesting, as the Federal Reserve issues a policy statement after its meeting. This will be followed by the release of the Advance GDP report, a market-mover event.

Japan’s trade deficit widened in September to JPY 0.36 trillion, well above the estimate of JPY 0.07 trillion. The weak figure points to a drop in Japanese exports, and the country may be headed to a recession in the third quarter. This has raised speculation that the BOJ may implement additional stimulus. Further monetary easing by the BOJ would likely push the struggling yen downwards. However, there was some good news on Friday, as the October Japanese Flash Manufacturing PMI improved to 52.5 points, beating the estimate of 50.6 points. This marked this PMI’s  best showing since October 2014.


USD/JPY Fundamentals

Monday (Oct. 26)

14:00 US New Home Sales. Estimate 546K. Actual 468K

23:50 Japanese Services Producer Price Index . Estimate 0.6%

Upcoming Events

Tuesday (Oct. 27)

  • 12:30 US Core Durable Goods Orders. Estimate 0.0%
  • 14:00 US CB Consumer Confidence. Estimate 102.5 points
  • 23:50 Japanese Retail Sales. Estimate 0.5%


USD/JPY for Monday, October 26, 2015

USD/JPY October 26 at 17:05 GMT

USD/JPY 120.91 H: 121.34 L: 120.55


USD/JPY Technical

S3 S2 S1 R1 R2 R3
116.90 118.53 120.40 121.50 122.40 123.74
  • USD/JPY posted slight losses in the Asian session. The pair has shown little movement in the European and North American sessions.
  • 120.40 is a weak support level.
  • 121.50 is an immediate resistance line.
  • Current range: 120.40 to 121.50

Further levels in both directions:

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


OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in short positions on Monday, as the ratio is almost evenly split between long and short positions. This is indicative of a lack of trader bias as to what direction the pair will take.

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.