USD/JPY – Yen Ticks Higher, Japanese Manufacturing Report Misses Expectations

The Japanese yen has posted slight gains in the Monday session. In North American trade, USD/JPY is trading at 113.30, down 0.16% on the day. On the release front, Japanese BSI Manufacturing Index improved to 9.7 points, but this fell short of the estimate of 10.1 points. In the US, JOLTS Openings softened to 6.00 million, shy of the estimate of 6.03 million. On Tuesday, the US releases PPI, an important inflation indicator.

The markets continue to digest Friday’s US employment numbers, which were a mix. Nonfarm Employment Change softened in November, but the reading of 228 thousand easily beat the estimate of 198 thousand. However, Average Hourly Earnings, which measures wage growth, came in at 0.2%, shy of the estimate of 0.3%. Analysts remain stumped as to why wages remain stubbornly low, given a red-hot labor market which is running at full capacity. On an annual basis, wages rose 2.5%, short of the forecast of 2.7%. The Fed is also concerned with the lack of wage growth, and this could have a significant effect on monetary policy – if wage growth and inflation shows improvement in 2018, the Fed could raise rates up to three times in 2018.

Will the real Kuroda please stand up? Bank of Japan Governor Haruhiko Kuroda has been sending mixed signals over the BoJ’s monetary policy. Kuroda has insisted that there will be no reduction of stimulus until the Bank’s inflation target of 2% is met. Still, there has been pressure on him to reconsider, given the marked improvement in Japanese economy this year. However, the governor has recently dropped subtle hints about easing monetary policy. Last week, Kuroda said that a change in economic conditions could lead the BoJ to raise its yield target, which would be a significant change to current policy. Kuroda noted that an exit from quantitative and qualitative easing would be “quite an important topic” to communicate to the markets. Although the BoJ is unlikely to tighten policy before next year at the earliest, these deliberate hints indicated that the Bank is preparing for a time when conditions will warrant tightening monetary policy, after years of an ultra-accommodative stance.

USD/JPY Fundamentals

Sunday (December 10)

  • 18:50 Japanese BSI Manufacturing Index. Estimate 10.1. Actual 9.7

Monday (December 11)

  • 1:04 Japanese Preliminary Machine Tool Orders. Estimate 46.9%
  • 10:00 US JOLTS Job Openings. Estimate 6.03M. Actual 6.00M
  • 13:01 US 10-y Bond Auction
  • 18:50 Japanese PPI. Estimate 3.3%
  • 23:30 Japanese Tertiary Industry Activity. Estimate 0.2%

Tuesday (December 12)

  • 8:30 US PPI. Estimate 0.4%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, December 11, 2017

USD/JPY December 11 at 10:40 EDT

Open: 113.48 High: 113.69 Low: 113.24 Close: 113.31

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.10 111.53 112.57 113.55 114.59 115.50

USD/JPY was flat in the Asian session. The pair posted slight losses in the European session and is flat in North American trade

  • 112.57 is providing support
  • 113.55 was tested earlier in resistance and is a weak line

Current range: 112.57 to 113.55

Further levels in both directions:

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

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (54%). This is indicative of trader bias towards USD/JPY reversing directions and moving lower.

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.