The Japanese yen continues to have a quiet week, and has posted small gains in the Thursday session. In North American trade, USD/JPY is trading at 106.11, up 0.04% on the day. In economic news, Japan releases Household Spending, which is expected to post a decline of 1.1%. Later in the day, the Bank of Japan will set interest rates and release a monetary policy statement. In the US, unemployment claims jumped to 231 thousand, well above the estimate of 220 thousand. On Friday, the US releases wage growth and nonfarm payrolls.
Will the Bank of Japan drop any hints about exiting its massive stimulus program? The BoJ has been lagging behind the Fed and other central banks in winding up stimulus, but Kuroda added that the Bank would normalize policy if “economic conditions become favorable and our price target is achieved”. Any additional hints from Kuroda or his colleagues about normalization could strengthen the yen, which has run roughshod over the dollar in 2018, with gains of 6.3%. The Japanese economy has shown strong improvement, but inflation remains well below the BoJ target of around 2%, so the BoJ is unlikely to make any dramatic moves in the near future.
The US dollar has been under pressure since US President Trump proposed stiff tariffs on steel imports, much to the consternation of the European Union and other US trading partners. There is also strong domestic opposition to the proposal, as Republican lawmakers, including House Speaker Paul Ryan, have come out against the move. This has raised hopes that Trump will back down. There was further drama on Wednesday, as Gary Cohn, Trump’s chief economic adviser, resigned. Cohn was a strong advocate of free trade, so his resignation could weaken opposition in the White House to the tariffs. Will Trump make good on his threat or back off? Until the situation is resolved, traders should be prepared for continuing volatility in the markets.
Thursday (March 8)
- 00:03 Japanese Economy Watchers Sentiment. Estimate 50.6. Actual 48.6
- 7:30 US Challenger Job Cuts. Actual -4.3%
- 8:30 US Unemployment Claims. Estimate 220K. Actual 231K
- 10:30 US Natural Gas Storage. Estimate -58B
- 18:30 Japanese Household Spending. Estimate -1.1%
- 18:50 Japanese M2 Money Stock. Actual 3.3%
- 19:00 Japanese Average Cash Earnings. Estimate 0.6%
- Tentative – BoJ Policy Rate. Estimate -0.10%
- Tentative – BoJ Monetary Policy Statement
Friday (March 9)
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 201K
- 8:30 US Unemployment Rate. Estimate 4.0%
*All release times are EST
*Key events are in bold
USD/JPY for Thursday, March 8, 2018
USD/JPY March 8 at 11:20 EST
Open: 106.07 High: 106.26 Low: 105.89 Close: 106.11
USD/JPY posted small losses in the Asian session and recovered in European trade. The pair is flat in North American trade
- 105.53 is providing support
- 106.64 is the next resistance line
Further levels in both directions:
- Below: 105.53, 104.32 and 103.09
- Above: 106.64, 107.29, 108.00 and 109.11
- Current range: 105.53 to 106.64
OANDA’s Open Positions Ratios
USD/JPY is showing slight movement towards long positions. Currently, long positions have a majority (67%). This indicative of trader bias towards USD/JPY continuing to head higher.