USD/JPY – Dollar Pushes Yen Lower, US Home Sales Sparkle

USD/JPY has recorded slight gains in the Wednesday session, continuing the upward movement seen on Tuesday. In North American trade, USD/JPY is trading at 113.19, up 0.25% on the day. On the release front, Japanese All Industries Activity rebounded with a gain of 0.3%, its best gain since August. In the US, Existing Home Sales surged 5.81 million in November, its strongest pace since December 2006. Later in the day, the Bank of Japan releases its monetary policy statement. Thursday is a busy day in the US, with the release of third quarter Final GDP. We’ll also get a look at the Philly Fed Manufacturing Index and unemployment claims.

Investors shouldn’t expect any dramatic announcements from the Bank of Japan, which is holding a policy meeting and will make a rate announcement. 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.

The White House is all decked out for Christmas, and President Trump’s gift-wrapped present from Republican lawmakers should be ready later on Wednesday. Trump’s election pledge to implement major tax reform is on the verge of becoming law. The tax bill was passed in the House of Representatives and the Senate on Tuesday, but the bill is being sent back to the House for another vote on Wednesday due to a procedural requirement. The legislation is expected to be ratified by the House and will then be sent to Trump to be signed into law. As expected, the congressional votes went along party lines, with the Senate narrowly approving the bill by a count of 51-48. This marks the first major overhaul of the US tax code in 30 years, and reduces corporate taxes from 35% to 21%. After failing to overturn Obamacare, the Republicans can finally chalk up their first legislative victory in the Trump administration, ahead of Congressional elections in 2018.

USD/JPY Fundamentals

Tuesday (December 19)

  • 23:30 Japanese All Industries Activity. Estimate 0.4%. Actual 0.3%

Wednesday (December 20)

  • 10:00 US Existing Home Sales. Estimate 5.53M. Actual 5.81M
  • 10:30 US Crude Oil Inventories. Estimate -3.6M
  • Tentative – BoJ Monetary Policy Statement
  • Tentative – BoJ Policy Rate. Estimate -0.10%

Thursday (December 21)

  • 1:30 BoJ Press Conference
  • 8:30 US Final GDP. Estimate 3.3%
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.5
  • 8:30 US Unemployment Claims. Estimate 232K

*All release times are GMT

*Key events are in bold

 

USD/JPY for Wednesday, December 20, 2017

USD/JPY December 20 at 10:20 EDT

Open: 112.89 High: 113.30 Low: 112.85 Close: 113.17

 

USD/JPY Technical

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

USD/JPY inched higher in the Asian and posted small gains in European trade. The pair is steady in North American trade

  • 112.57 is providing support
  • 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 unchanged in the Wednesday session. Currently, long positions have a majority (52%), indicative of slight trader bias towards USD/JPY continuing to move higher.

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.