USD/JPY – Yen Slides as US Retail Sales Beats Estimate

USD/JPY has jumped higher in Tuesday’s North America session. In North American trade, the pair is trading at 110.78, up 1.04% on the day. On the release front, Japanese Revised Industrial Production rebounded with a strong gain of 2.2%, beating the forecast of 1.6%. In the US, Retail Sales came in at 0.6%, above the estimate of 0.3%. Core Retail Sales also looked sharp, with the gain of 0.5% beating the forecast of 0.3%. There was more good news from the manufacturing sector, as the Empire State Manufacturing Index soared to 25.2, crushing the estimate of 10.1 points. On Wednesday, the US releases Building Permits and Housing Starts. As well, the FOMC publishes its minutes from the July FOMC meeting.

The yen posted strong gains last week, as the saber-rattling between the US and North Korea reached a fever pitch. North Korea threatened to fire missiles at Guam, and President Trump warned of severe consequences in response. The safe-haven yen gained 1.3% last week, but the dollar has regained these losses, as a reduction in the rhetoric between Washington and Pyongyang has increased risk appetite on the part of investors. Still, tensions remain high in the Korean peninsula, and if either side ratchets up the rhetoric, the markets could again get jittery and the yen could gain ground.

The Japanese economy has shown signs of improvement, and this was underscored as Preliminary GDP posted a strong gains of 1.0% in Q2. Japan has now posted a sixth consecutive of growth, marking the longest expansion in over a decade. Although exports have declined, domestic demand has rebounded. With a tight labor market and the business sector confident about economic conditions, better times could continue in 2017. The fly in the ointment remains inflation, as BoJ’s ultra-easy monetary policy has failed to eliminate the threat of deflation. The BoJ has insisted that it will not tighten policy before inflation climbs closer to the bank’s inflation target of 2%, but clearly this goal is unrealistic in the short term, and the BoJ may have to lower its inflation target.

USD/JPY Fundamentals

Tuesday (August 15)

  • 00:30 Japanese Revised Industrial Production. Estimate 1.6%. Actual 2.2%
  • 8:30 US Core Retail Sales. Estimate 0.3%. Actual 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.6%
  • 8:30 US Empire State Manufacturing Index. Estimate 10.1. Actual 25.2
  • 8:30 US Import Prices. Estimate 0.1%. Actual 0.1%
  • 10:00 US Business Inventories. Estimate 0.4%
  • 10:00 US NAHB Housing Market Index. Estimate 64
  • 14:00 US TIC Long-Term Purchases. Estimate 28.3B

Wednesday (August 16)

  • 8:30 US Building Permits. Estimate 1.25M
  • 8:30 US Housing Starts. Estimate 1.23M
  • 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, August 15, 2017

USD/JPY August 15 at 9:20 EDT

Open: 109.63 High: 110.84 Low: 109.61 Close: 110.78

USD/JPY Technical

S3 S2 S1 R1 R2 R3
107.49 108.69 110.10 110.94 112.57 113.55

USD/JPY posted gains in the Asian session. The pair edged higher in European trade and has posted further gains in the North American session

  • 110.10 is providing support
  • 110.94 is a weak resistance line. It could break in the North American session

Current range: 108.69 to 110.10

Further levels in both directions:

  • Below: 110.10, 108.63, 107.49 and 106.28
  •  Above: 110.94, 112.57 and 113.55

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Tuesday session. Currently, long positions have a majority (66%), indicative of trader bias towards USD/JPY continuing to move 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.

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.