USD/JPY – Japanese Yen Edges Higher as Tankan Indices Within Expectations

USD/JPY has posted slight gains in the Monday session. In the North American session, USD/JPY is trading at 106.37, up 0.10% on the day. On the release front, the Tankan Indices were within expectations. Japanese Final Manufacturing PMI softened to 53.1, just shy of the estimate of 53.2 points. In the US, today’s key event is ISM Manufacturing PMI, which is expected to soften to 60.1 points.

Business confidence in Japan remained solid in the fourth quarter, according to the well-respected Tankan Indices. In the manufacturing sector, the indicator edged down from 25 to 24 points, and confidence in the services sector was unchanged at 23 points. The Japanese economy continues to perform well, boosted by stronger global demand. However, in the Tankan surveys, some business reported a shortage of skilled labor. Unemployment levels in Japan have fallen to 25-year lows, as the economy has improved while the working-age population continues to shrink.

Are we at the onset of a new global trading war? On Monday, China responded to recent US tariffs, imposing its own duties on a range of US goods, including frozen pork and wines. This move is bound to escalate tensions between the two economic giants, and has raised fears that a new global trade war could be underway. If the tit-for-tat measures continue, both the US and Chinese economies could suffer, which could lead to a global slowdown. Both sides are digging in tough and pointing fingers, and if tensions worsen, the volatility we’ve seen in the markets is likely to continue.

 

USD/JPY Fundamentals

 Sunday (April 1)

  • 19:50 Japanese Tankan Manufacturing Index. Estimate 25. Actual 24
  • 19:50 Japanese Tankan Non-Manufacturing Index. Estimate 24. Actual 23
  • 20:30 Japanese Final Manufacturing PMI. Estimate 53.2. Actual 53.1

 Monday (April 2)

  • 9:45 US Final Manufacturing PMI. Estimate 55.7. 
  • 10:00 US ISM Manufacturing PMI. Estimate 60.1 
  • 10:00 US Construction Spending. Estimate 0.4%. 
  • 10:00 US ISM Manufacturing Prices. Estimate 72.5
  • 19:50 Japanese Monetary Base. Estimate 9.6%.
  • 23:45 Japanese 10-year Bond Auction

*All release times are EST

*Key events are in bold

 

USD/JPY for Monday, April 2, 2018

USD/JPY April 2 at 9:30 EST

Open: 106.24 High: 106.45 Low: 106.19 Close: 106.37

 

USD/JPY Technical

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

USD/JPY showed little movement in the Asian and European sessions. The pair has inched higher in North American trade

  • 105.53 is providing support
  • 106.64 is a weak resistance line

Further levels in both directions:

  • Below: 105.53, 104.32, 103.09 and 101.84
  • Above: 106.64, 107.29 and 108.00
  • 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 (70%). This is indicative of trader bias towards USD/JPY continuing to head to higher ground.

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.