USD/JPY – Yen Dips Lower, Investors Eye ADP Nonfarm Payrolls

USD/JPY has posted considerable gains in the Tuesday session, after starting the week with losses. In the North American session, USD/JPY is trading at 106.54, up 0.61% on the day. It’s quiet on the release front, with no Japanese events. In the US, IBD/TIPP Economic Optimism dropped to 52.6, well below the estimate of 55.2 points. This marked a 4-month low. On Wednesday, the US releases two major indicators – ADP non-farm payrolls and the ISM Non-Manufacturing PMI.

The Japanese economy continues to perform well, and predictably, business confidence remains strong. The Tankan indices pointed to solid optimism in the fourth quarter, in both the services and manufacturing sectors. The manufacturing 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, the Tankan indices also reported that many businesses are reporting 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.

Investors continue to monitor the tariff battle between China and the US. The week started with China retaliating and imposing its own duties on a range of US goods, including frozen pork and wines. For its part, the US is expected to list which Chinese product will be subject to US tariffs. With the two economic giants showing no signs of backing down, there are growing 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 recession. The yen is a key safe-haven asset, and nervous investors could snap up the Japanese currency if there is no quick resolution to the tariff spat unleashed by US President Trump.

USD/JPY Fundamentals

 Tuesday (April 3)

  • 10:05 US IBD/TIPP Economic Optimism. Estimate 55.2. Actual 52.6
  • All Day – US Total Vehicle Sales. Estimate 16.9M
  • 16:30 US FOMC Member Lael Brainard Speaks

 Wednesday (April 4)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 206K
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, April 3, 2018

USD/JPY April 3 at 11:00 EST

Open: 105.90 High: 106.58 Low: 105.69 Close: 106.54

USD/JPY Technical

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

USD/JPY inched higher in the Asian session and has edged higher in the European and North American sessions

  • 105.53 is providing support
  • 106.64 remains a weak resistance line. It could be tested in the North American session

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

USD/JPY ratio is showing little movement. Currently, long positions have a majority (68%), 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.