The Japanese yen is trading sideways in the Monday session. In North American trade, USD/JPY is trading at 110.14, down 0.02% on the day. On the release front, there are no Japanese events on the schedule. In the US, the ISM Non-Manufacturing PMI climbed to 59.9, above the forecast of 56.5 points. This points to strong expansion in the services sector and marked a 3-month high. On Tuesday, the US releases JOLTS Job Openings.
The yen had a rough week, declining 1.5%. On Friday, US employment numbers were strong, propelling the dollar to broad gains against major currencies, including the yen. Nonfarm payrolls jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes.
The Bank of Japan has continually said that it has no plans to end its massive stimulus program, and continues to back up this assertion with action and words. Last week, the BoJ increased its purchases of 3-5 year government bonds (JGB), while at the same time senior members were on the offensive. BoJ Governor Haruhiko Kuroda and Deputy Governor Kikuo Iwata said that the Bank would maintain “powerful” easing as long as inflation was well of the BoJ target of 2 percent. Iwata stressed that the BoJ had no plans to change its yield target levels “for the time being”. Under current yield curve policy, short-term interest rates are at -0.10% and 10-year government bonds are at 0.0%. The Japanese economy has heated up, raising speculation that the Bank could taper its stimulus program and even raise interest rates. However, the BoJ appears determined to maintain monetary policy until inflation moves higher.
Monday (February 5)
- 9:45 US Final Non-Manufacturing PMI. Estimate 53.3. Actual 53.3
- 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5. Actual 59.9
- Tentative – US Loan Officer Survey
Tuesday (February 6)
- 10:00 US JOLTS Jobs Openings. Estimate 5.95M
*All release times are GMT
*Key events are in bold
USD/JPY for Monday, February 5, 2018
USD/JPY February 5 at 11:10 EDT
Open: 110.18 High: 110.28 Low: 109.65 Close: 110.14
USD/JPY inched lower in the Asian session and was steady in European trade. USD/JPY has posted gains in the North American session
- 110.10 was tested earlier in support and is a weak line
- 111.53 is the next resistance line
Current range: 110.10 to 111.53
Further levels in both directions:
- Below: 110.10, 109.11, 108.21 and 107.29
- Above: 111.53, 112.57 and 113.39
OANDA’s Open Positions Ratios
In the Thursday session, USD/JPY ratio is showing a majority (68%). This is indicative of trader bias towards USD/JPY breaking out and moving higher.