USD/JPY – Yen Gains Ground, Japanese GDP Next

The Japanese yen has posted slight losses in the Monday session. In North American trade, USD/JPY is trading at  108.48, down 0.30% on the day. On the release front, there are no major indicators on the schedule. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. This would mark the first surplus since September. In Japan, the Producer Price Index is expected to slow to 2.7%. On Tuesday, Japanese Preliminary GDP is expected to slow to 0.2% in the fourth quarter.

Turbulence in global stock markets last week triggered strong relativity in the currency markets. Most currencies lost ground against the US dollar, but the safe-haven Japanese yen bucked the trend. USD/JPY dropped 1.2%, and touched a low of 108.04, its lowest level since early September. A key reason for the sell-off was investor concern over possible interest rate hikes by major central banks. The Bank of England has said it could accelerate its pace of hikes, and the Federal Reserve could follow suit if inflation moves higher.

It’s a quiet start to the week in the US, and the US dollar has been generally subdued. That will likely change on Wednesday, with the release of inflation and retail sales reports. The markets will be glued to the inflation indicators, as last week’s stock market slide was triggered by concern that higher inflation would lead to additional rate hikes from the Federal Reserve and other central banks. If inflation numbers are higher than expected, we could see some volatility from the US dollar as well as the stock markets.

USD/JPY Fundamentals

Monday (February 12)

  • 14:00 US Federal Budget Balance. Estimate 50.2B
  • 18:50 Japanese PPI. Estimate 2.7%

Tuesday (February 13)

  • 1:00 Japanese Preliminary GDP. Estimate 0.2%

*All release times are EST

*Key events are in bold

USD/JPY for Monday, February 12, 2018

USD/JPY February 12 at 10:55 EST

Open: 108.80 High: 108.89 Low: 108.44 Close: 108.48

USD/JPY Technical

S3 S2 S1 R1 R2 R3
106.64 107.29 108.21 109.11 110.10 111.53

USD/JPY inched lower in the Asian and European sessions. The pair has continued the trend in North American trade, posting small gains.

  • 109.11 remains a weak line. It could break in the North American session
  • 110.10 is the next resistance line

Current range: 108.21 to 109.11

Further levels in both directions:

  • Below: 108.21, 107.29 and 106.64
  • Above: 109.11, 110.10, 111.53 and 112.57

OANDA’s Open Positions Ratios

In the Monday session USD/JPY ratio is showing long positions with a majority (69%). This is indicative of trader bias towards USD/JPY reversing directions 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.