USD/JPY – Japanese Yen Drifting Continues, Consumer Spending Shines

USD/JPY has shown little movement since Thursday, and this trend continues on Tuesday. Japanese markets were open over Christmas Day, and some strong Japanese numbers on Monday could push the yen higher during the week.

Japan released consumer spending and inflation numbers on Monday, and the readings were strong. Tokyo Core CPI, the primary gauge of consumer inflation, climbed 0.9%, in December its strongest gain since March 2015. This edged above the forecast of 0.8%. Household Spending rebounded with an excellent gain of 1.7%, crushing the estimate of 0.6%. This reading marked a 5-month high. Later in the week, we’ll get a look at another inflation indicator, BoJ Core Inflation.

It was more of the same from the BoJ, which wrapped up a two-day policy meeting last week. Policymakers voted to hold record low interest rates and the target for the 10-year government bond yield at zero percent. The BoJ acknowledged stronger economic conditions, saying that the “economy is expanding moderately”. A stronger global economy has boosted Japan’s export and manufacturing sectors. However, inflation levels remains well below the BoJ’s target of around 2 percent, and with this trend likely to continue well into 2018 or later, the BoJ is likely to hold the course on interest rate levels and its ultra-accommodative stimulus program. At a news conference, BoJ Governor stressed the importance of reaching the 2% inflation target, adding that the Bank would not “raise interest rates just because the economy is improving.”

Heading into Christmas, key US indicators were a mix. Core Durable Goods Orders declined 0.1%, missing the estimate of +0.5%. This marked the first decline since May. Durable Goods Orders rebounded with a gain of 1.3%, but this was well short of the estimate of 2.1%. Consumer confidence slowed to 95.9, shy of the estimate of 97.1 points. On the positive side, Personal Spending improved to 0.6%, edging above the estimate of 0.5%. As well, New Home Sales jumped to 733 thousand, crushing above the estimate of 654 thousand. This was the highest reading since September 2007.

 

USD/JPY Fundamentals

Monday (December 25)

  • 18:30 Japanese Household  Spending. Estimate 0.6%. Actual 1.7%
  • 18:30 Japanese Tokyo Core CPI. Estimate 0.7%. Actual 0.8%
  • 23:00 BoJ Governor Kuroda Speaks

Tuesday (December 26)

  • 10:00 US CB Consumer Confidence. Estimate 128.2

Wednesday (December 27)

00:00 Japanese Housing Starts. Estimate -2.5%

*All release times are GMT

*Key events are in bold

 

USD/JPY for Tuesday, December 26, 2017

USD/JPY December 26 at 7:55 EDT

Open: 113.30 High: 113.35 Low: 113.23 Close: 113.30

 

USD/JPY Technical

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

USD/JPY showed little movement in the Asian session and has been flat in European trade

  • 112.57 is providing support
  • 113.55 remains a weak 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

In the Tuesday session, USD/JPY ratio is showing long positions with a majority (53%). This is indicative of slight trader bias towards USD/JPY breaking out and moving 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.