USD/JPY – Japanese Yen Edges Lower, Investors Eye BoJ Minutes

The Japanese has edged lower to start the week. In North American trade, USD/JPY is trading at 106.55, down 0.25% on the day. In economic news, Japanese BSI Manufacturing Index dropped sharply to 2.9, well short of the estimate of 10.3 points. There are no major US releases on the schedule. On Tuesday, the US publishes CPI reports and the BoJ releases the minutes of the January meeting.

The Bank of Japan held the course on interest rates at its Thursday meeting, as it kept short-term rates at -0.1% and 10-year government bonds at around zero percent. The Bank sounded optimistic about economic growth, which has been moderate but steady, thanks to a strong export sector. However, BoJ Governor Haruhiko Kuroda was decidedly dovish in his remarks, saying that the BoJ would consider further easing if inflation did not reach the bank’s target of around 2% by 2020. These comments mark a 180-degree turn from remarks just a week earlier, in which Kuroda talked about the possibility of an exit from stimulus, which sent the yen upwards.

In the US, employment numbers were a mix on Friday. Wage growth dropped to 0.1% in February, down from 0.3% a month earlier. This missed the estimate of 0.2%, and marked the lowest gain in four months. The news was much better from nonfarm payrolls, which soared to 313 thousand, crushing the estimate of 205 thousand. The mixed numbers have eased concerns about the Fed raising rates four times in 2018. At the same time, a rate hike is very likely at next week’s Fed meeting, with the CME Group pegging the odds of a hike at 86%.

Tensions have eased somewhat regarding the tariffs which President Trump imposed on Thursday. Trump has exempted Canada and Mexico from the tariffs, and has said that Washington could ease the duties on other countries as well. Importantly, is strong domestic opposition to Trump’s move, including senior Republican lawmakers who have said they will work to overturn the tariffs, which could spark an all-out trade war. So far, the markets are confident that a solution to the tariff tussle will be found.

Dollar Lower on Risk Appetite Recovery

USD/JPY Fundamentals

Sunday (March 11)

  • 19:50 Japanese BSI Manufacturing Index. Estimate 10.3. Actual 2.9

Monday (March 12)

  • 1:58 Japanese Preliminary Machine Tool Orders. Actual 39.5%
  • 13:01 US 10-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -222.3B
  • 19:50 Japanese PPI. Estimate 2.5%
  • 19:50 Japanese Core Machinery Orders. Estimate 5.3%
  • 19:50 BoJ Monetary Policy Meeting Minutes

Tuesday (March 13)

  • 8:30 US CPI. Estimate 0.2%
  • 8:30 US Core CPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

USD/JPY for Monday, March 12, 2018

USD/JPY March 12 at 12:00 EST

Open: 106.82 High: 106.97 Low: 106.36 Close: 106.55

USD/JPY Technical

S3 S2 S1 R1 R2 R3
103.09 104.32 105.53 106.64 107.29 108.00

USD/JPY posted slight gains in the Asian session but retracted. The pair has shown limited movement in the European and North American sessions

  • 105.53 is providing support
  • 106.64 has switched to a resistance role following losses from USD/JPY. It remains a weak 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

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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