USD/JPY – Yen Shrugs off Weak Retail Sales

The Japanese yen is subdued in the Wednesday session. In the North American session, USD/JPY is trading at the 111 level. On the release front, Japanese Retail Sales posted a small gain of 0.1%, well short of the estimate of 0.7%. In the US, Pending Home Sales sparkled with a gain of 5.5%, well above the forecast of 2.3%. On Thursday, the US releases Final GDP and unemployment claims. Japan will publish Household Spending.

President Donald Trump found himself on the short end of the stick in the rough-and tumble politics in Washington. Last week, Trump’s bill to replace the Affordable Care Act was pulled before prior to a vote. This was a humiliating setback for Trump, given that the Republicans enjoying a majority in Congress. The bruising defeat has sent the US dollar sharply lower and market jitters higher. Trump’s administration has stumbled out of the starting gate, and after more than two months in office, he has yet to provide any details over even an outline of economic policy. The inquiry into the Trump administration’s links with Russia is gathering steam, and is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but he has his work cut out, trying to convince a skeptical Congress and general public that he can deliver the goods and push his tax legislation through Congress.

What’s next for the Bank of Japan? On Monday, the BoJ released a summary of the minutes of its policy meeting from March 16. There were no surprises, as policymakers said the BoJ’s ultra-easy monetary stance would continue as long as inflation remains well below the target of 2 percent. Japan’s economy has improved in recent months, boosted by a stronger manufacturing sector and an increase in exports, but domestic demand remains soft, resulting in weak inflation levels. We’ll get a look at household spending and Tokyo Core CPI on Thursday.

USD/JPY Fundamentals

Tuesday (March 29)

  • 19:50 Japanese Retail Sales. Estimate 0.7%. Actual 0.1%

Wednesday (March 30)

  • 9:20 US FOMC Member Charles Evans Speech
  • 10:00 US Pending Home Sales. Estimate 2.3%. Actual 5.5%
  • 10:30 US Crude Oil Inventories. Estimate 1.2M. Actual 0.9M

Upcoming Key Events

Thursday (March 30)

  • 8:30 US Final GDP. Estimate 2.0%
  • 8:30 US Unemployment Claims. Estimate 244K
  • 19:30 Japanese Household Spending. Estimate -1.6%

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, March 29, 2017

USD/JPY March 28 at 13:20 EST

Open: 111.22 High: 111.32 Low: 110.71 Close: 111.02

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.54 109.77 110.94 112.57 113.80 114.83

USD/JPY showed limited movement in the Asian session. The pair edged lower in European trade but has moved upwards in the North American session

  • 110.94 remains fluid. Currently it is a weak support line
  • 112.57 is the next resistance line
  • Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 109.77, 108.54 and 107.49
  •  Above: 112.57, 113.80 and 114.83

OANDA’s Open Positions Ratio

USD/JPY ratio continues to show gains towards long positions. Currently, long positions have a majority (63%), indicative of trader bias towards USD/JPY reversing directions and moving 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.

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.