USD/JPY – Dollar Gains Continue, Markets Eye BOJ Minutes

USD/JPY has posted modest gains on Wednesday, as the pair trades at 121.50 early in the North American session. In economic news, there are a host of key US releases on the calendar. ADP Nonfarm Payrolls was very close to the forecast, and Trade Balance and ISM Services PMI both beat expectations. As well, Fed Chair Janet Yellen continues her testimony on Capitol Hill, as she speaks before the House Financial Services Committee.

In Japan, the BOJ will release the minutes of last month’s policy meeting. At the meeting, policymakers opted to stay on the sidelines rather than increase stimulus. However, it may be simply a matter of time before the BOJ is forced to take action, given the economy’s lackluster performance and no inflation in sight. So, any hints in the minutes of possible easing in the near future could send the yen to lower levels.

It was a positive day for US releases, and the dollar responded with modest gains against the yen. ADP Nonfarm Payrolls, which precedes the official Nonfarm Payroll report, came in at 182 thousand, very close to the forecast but well off last month’s reading of 200 thousand. The September US trade deficit narrowed to $40.8 billion, its lowest level since February. There was more good news from the ISM Non-Manufacturing PMI, which jumped to 59.1 points, easily beating the estimate of 56.6 points.

With a rate hike from the Fed back on the table, the markets will be keeping a close eye on US key releases, especially employment and inflation numbers. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released last week. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure was much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. We’ll get a look at a host of additional job numbers this week, with the release of unemployment claims and the unemployment rate on Thursday and Nonfarm Payrolls on Friday. Nonfarm Payrolls is expected to improve in the October reading, and if the indicator beats expectations, the dollar could make broad gains.

USD/JPY Fundamentals

Wednesday (Nov. 4)

• 10:30 FOMC Member Lael Brainard Speaks
• 13:15 US ADP Nonfarm Employment Change. Estimate 183K. Actual 182K
• 13:30 US Trade Balance. Estimate -42.7B. Actual -40.8B
• 14:45 US Final Services PMI. Estimate 54.6 points Actual 54.8 points
• 15:00 Federal Reserve Chair Janet Yellen Testifies
• 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points. Actual 59.1 points
• 15:30 US Crude Oil Inventories. Estimate 2.5M
• 19:30 FOMC Member William Dudley Speaks
• 23:50 Bank of Japan Monetary Policy Meeting Minutes

Upcoming Key Events

Thursday (Nov. 5)

• 13:30 US Unemployment Claims. Estimate 263K
  

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Wednesday, November 4, 2015

USD/JPY November 4 at 15:30 GMT

USD/JPY 121.37 H: 121.55 L: 120.00

USD/JPY Technical

• USD/JPY is testing resistance at 121.50.
• 120.40 has strengthened in support as the yen trades at higher levels.
• 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, although long positions retain a slight majority (53%). This is indicative of slight trader bias towards the pair continuing to move 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.