The Japanese yen has recorded slight gains in the Tuesday session. In North American trade, USD/JPY is trading at 112.77, up 0.20% on the day. In the US, construction numbers were sharp, as Building Permits and Housing Starts both beat expectations. There was more good news as the US current account deficit in Q3 dropped to $101 billion, easily beating the estimate of $116 billion. This marked the lowest deficit since 2014. Later in the day, Japan releases All Industries Activity, with an estimate of 0.4%.
The Federal Reserve and the ECB set interest rates last week, and it’s the turn of the Bank of Japan, which holds a policy meeting on Wednesday and Thursday. The BoJ is expected to hold the course and maintain interest rate levels and its stimulus package. Japan’s economy has rebounded in 2017, as a stronger global economy has boosted the country’s export and manufacturing sectors. Still, ultra-low interest rates have resulted in a weak yen, much to the angst of Japan’s trading partners, which has accused Tokyo of manipulating the exchange rate in order to boost exports. Although BoJ Governor Haruhiko Kuroda has dropped some hints about reducing stimulus, absent a surge in inflation, such a move is unlikely in the near future.
President Trump’s proposal to replace Obamacare was a disaster, but things are looking much brighter for his tax reform initiative. Barring any unexpected surprises, tax reform will become law this week. On Friday, the legislation passed a major milestone, as the House and Senate hammered out the differences in their tax proposals and drafted a uniform bill. The legislation is expected to be voted on in the House later on Tuesday and the Senate on Wednesday. With Democrats in both branches opposing tax reform, the Republicans will need every vote in the Senate, where they have a thin 59-41 majority. Several Republican senators who were undecided have said they will vote in favor, so the bill is likely to pass through Congress and will then be signed into law by President Trump. This marks the first major overhaul of the US tax code in 30 years, and would represent a huge victory for Trump, ahead of Congressional elections in 2018.
Tuesday (December 19)
- 8:30 US Building Permits. Estimate 1.27M. Actual 1.30M
- 8:30 US Current Account. Estimate -116B. Actual -101B
- 8:30 US Housing Starts. Estimate 1.25M. Actual 1.30M
- Tentative – US FOMC Member Neel Kashkari Speaks
- 23:30 Japanese All Industries Activity. Estimate 0.4%
Wednesday (December 20)
- 10:00 US Existing Home Sales. Estimate 5.53M
- Tentative – BoJ Monetary Policy Statement
- Tentative – BoJ Policy Rate. Estimate -0.10%
Thursday (December 21)
- 1:30 BoJ Press Conference
*All release times are GMT
*Key events are in bold
USD/JPY for Tuesday, December 19, 2017
USD/JPY December 19 at 10:10 EDT
Open: 112.54 High: 112.86 Low: 112.51 Close: 112.77
USD/JPY was flat in the Asian and European sessions. The pair has posted slight gains in North American trade
- 112.57 remains fluid. Currently, it is a weak support line
- 113.55 is the next resistance line
Current range: 112.57 to 113.55
Further levels in both directions:
- Below: 112.47, 111.53, 110.10 and 109.11
- Above: 113.55, 114.59 and 115.50
OANDA’s Open Positions Ratios
USD/JPY ratio is showing little movement this week. Currently, long positions have a majority (52%), indicative of slight trader bias towards USD/JPY moving higher.