USD/JPY – Yen Strengthens Despite Weak Industrial Report

The yen has posted slight gains in the Tuesday session. In North American trade, USD/JPY is trading at 112.38, down 0.21% on the day. On the release front, Japanese All Industries Activity declined 0.5%, edging below the forecast of 0.5%. This marked a second decline in just three months. In the US, Existing Home Sales jumped to 5.48 million, above the estimate of 5.42 million. Later in the day, Federal Reserve Chair Janet Yellen will speak at an event in New York City.

US construction numbers continue to beat expectations. On Monday, it was the turn of Existing Home Sales, which climbed to a 4-month high. On Friday, Building Permits and Housing Starts impressed the markets. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Starts also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.

Strong Japanese exports boosted the October trade surplus to JPY 0.32 trillion, well above the forecast of JPY 0.21 trillion. China is showing some momentum after a recent slowdown, and this has buoyed demand for Japanese automobiles, electronics and machinery. The robust manufacturing and export sectors have fueled a moderate recovery, as Japan has now posted seven consecutive quarters of growth, the longest economic expansion since 2001. Although the economy has improved in 2017, but this has not translated into higher inflation levels. Inflation remains persistently below the inflation target of around 2 percent, but the Bank of Japan has no plans to change policy. On Monday, Prime Minister Shinzo Abe said that the government and the BoJ would work together and take all needed steps to combat inflation.

USD/JPY Fundamentals

Monday (November 20)

• 23:30 Japanese All Industries Activity. Actual -0.4%. Actual -0.5%

Tuesday (November 21)

• 10:00 US Existing Home Sales. Estimate 5.42M. Actual 5.48M
• 18:00 US Federal Reserve Chair Janet Yellen Speaks

Wednesday (November 22)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Unemployment Claims. Estimate 241K
• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Durable Goods Orders. Estimate 0.4%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, November 21, 2017

USD/JPY November 21 at 11:00 EDT

Open: 112.62 High: 112.70 Low: 112.30 Close: 112.38

USD/JPY Technical

USD/JPY was flat in the Asian session. The pair ticked lower in the European session and continues to lose ground in North American trade

• 111.53 is providing support
• 112.57 remains fluid. Currently, it is a weak resistance line

Current range: 111.53 to 112.57

Further levels in both directions:

• Below: 111.53, 110.10 and 109.12
• Above: 112.57, 113.55, 114.59 and 115.50

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Tuesday session. Currently, long positions have a majority (53%), 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.