USD/JPY – Dollar Climbs Above 112, US Jobless Claim Next

The Japanese yen has posted small losses on Thursday session, erasing the gains which marked the Wednesday session. Currently, USD/JPY is trading at 112.40. On the release front, it’s another light day. Japanese Preliminary Machine Tool Orders posted a gain of 3.5%, a second straight gain after a long streak of declines. In the US, today’s highlight is unemployment claims, with the indicator expected to climb to 249 thousand. On Friday, the US releases UoM Consumer Sentiment. The markets aren’t expecting much movement, with a forecast of 97.9 points.

On Friday, Japanese Prime Minister Shinzo Abe comes to Washington, where he will hold talks with President Trump. The meeting comes at an important time, as both sides will be hoping to smooth some ruffled feathers. One of Trump’s first moves in office was to withdraw the US from the Trans-Pacific Partnership, a trade deal which Japan has strongly endorsed. Trump recently accused Japan of unfair trade practices in its ultra-loose monetary policy, which has kept the yen at low levels and helped boost Japanese exports. The Japanese have argued that they are not targeting the yen’s value, but rather trying to combat deflation. Still, Abe will have his work cut out for in trying to assuage Trump, who has shown little patience with US trading partners and has repeatedly made protectionist statements. Japan is heavily reliant on its export sector, and the last thing it needs is a trade war with the United States. Abe is expected to defuse the currency spat by suggesting that the US and Japan discuss currency policy at the next G7 meeting.

Abe Hoping to Move Conversation Away From Monetary Policy

Donald Trump hammered away at the economy during the election campaign, but was short on specifics as far as remedies. However, he did promise a significant fiscal boost through infrastructure spending and tax cuts. This led to a post-election euphoria in the markets and boosted the US dollar. Fast forward to February, and optimism has been replaced by caution and unease, as Trump continues to entangle himself in controversy, both with US trading partners and at home, with the media and Supreme Court. The markets are disappointed that Trump has not unveiled an economic plan or blueprint, limiting himself to protectionist rhetoric which has sent alarm bells ringing worldwide. On Wednesday, Goldman Sachs forecast that the administration won’t implement tax reform or infrastructure spending before 2018.

USD/JPY Fundamentals

Thursday (February 9)

• 1:00 Japanese Preliminary Machine Tool Orders. Actual 3.5%
• 8:30 US Unemployment Claims. Estimate 249K
• 10:00 US Final Wholesale Inventories. Estimate 1.0%
• 10:30 US Natural Gas Storage. Estimate -155B
• 13:01 US 30-y Bond Auction
• 13:10 US FOMC Member Charles Evans Speaks
• 18:50 Japanese PPI. Estimate 0.0%
• 23:30 Japanese Tertiary Industry Activity. Estimate -0.1%

Friday (February 10)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.9

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, February 9, 2017

USD/JPY February 9 at 7:20 EST

Open: 111.96 High: 112.48 Low: 111.87 Close: 112.46

USD/JPY Technical

USD/JPY has shown small gains in the Asian and European sessions

• 110.94 is providing support
• 112.57 remains a weak resistance line. It could break in the Thursday session
• Current range: 110.94 to 112.57

Further levels in both directions:

• Below: 110.94, 109.85 and 108.61
•  Above: 112.57, 113.80, 114.83 and 115.90

OANDA’s Open Positions Ratio

USD/JPY ratio is showing little movement in the Thursday session. Currently, long positions have a majority (54%), indicative of trader bias towards USD/JPY continuing to climb higher.

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.