USD/JPY – Japanese Yen Shrugs Mixed Tankan Indices

The Japanese yen has edged higher in the Monday session. In North American trade, USD/JPY is trading at the 111 line. On the release front, the Japanese Tankan indices were a mixed bag. The Tankan Manufacturing Index improved to 12, short of the forecast of 14 points. The Tankan Non-Manufacturing Index climbed to 20, edging above the forecast of 19 points. In the US, ISM Manufacturing PMI dropped to 57.2, matching the forecast.

What can the markets expect from the Bank of Japan? According to the summary of the minutes, which were released last week, we’re likely to see “more of the same” as far as monetary policy. There were no surprises from the summary, 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. At the same time, domestic demand remains soft, which has resulted in weak inflation levels.

Donald Trump’s young presidency has been turbulent, with Trump’s controversial statements and actions making headlines almost daily. The battles with the media continue, an economic policy remains a mystery, and Trump suffered a major setback as he couldn’t even muster a vote over his healthcare bill. Despite these hiccups, the US economy hasn’t missed a beat in 2017. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. This points to strong growth for the economy, as the discussions around the monetary policy tables are not whether the Fed will raise rates, but will it press the rate trigger twice or three times in 2017. The Fed will release the minutes of its March meeting on Wednesday, and the markets will be looking for clues as to the timing of a possible rate hike.

USD/JPY Fundamentals

Sunday (April 2)

• 19:50 Japanese Tankan Manufacturing Index. Estimate 14. Actual 12
• 19:50 Japanese Tankan Non-Manufacturing Index. Estimate 20. Actual 19
• 20:30 Japanese Final Manufacturing PMI. Estimate 52.6. Actual 52.4

Monday (April 3)

• 9:45 US Final Manufacturing PMI. Estimate 53.5. Actual 53.3
• 10:00 US ISM Manufacturing PMI. Estimate 57.2. Actual 57.2
• 10:00 US Construction Spending. Estimate 1.0%. Actual 0.8%
• 10:00 US ISM Manufacturing Prices. Estimate 68.5. Actual 70.5
• 10:30 US FOMC Member Esther Dudley Speech
• All Day – US Total Vehicles Sales. Estimate 17.4M
• 15:00 US FOMC Member Patrick Harker Speech
• 19:50 Japanese Monetary Base. Estimate 23.2%
• 23:45 Japanese 10-y Bond Auction

Tuesday (April 4)

• 1:00 Japanese BoJ Core CPI. Estimate 0.2%

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, April 3, 2017

USD/JPY April 3 at 11:15 EST

Open: 111.26 High: 111.59 Low: 110.92 Close: 111.01

USD/JPY Technical

USD/JPY showed limited movement for most of the Asian and European sessions. The pair has posted losses in North American trade

• 110.94 remains a weak support level
• 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

In the Monday session, USD/JPY ratio is showing long positions with a majority (60%). This is indicative of trader bias towards USD/JPY reversing directions and moving upwards.

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.