USD/JPY – Japanese Yen Edges Despite Dismal Current Account

USD/JPY has recorded small gains in the Monday session. In the North American session, USD/JPY is trading at 107.10, up 0.15% on the day. On the release front, Japan’s current account dropped sharply in February to JPY 1.02 trillion, down from 2.02 trillion in January. The reading fell short of the estimate of JPY 1.39 trillion. Japanese Consumer Confidence remains weak, and was unchanged at 44.3, missing the estimate of 44.6 points. Another consumer indicator, Economy Watchers Sentiment, rose to 48.9, above the forecast of 48.1 points. On Tuesday, the US releases PPI, a key inflation indicator.

US nonfarm payrolls, one of the most critical economic reports, was a major disappointment on Friday. The economy added just 103 thousand jobs, well off the forecast of 188 thousand. Still, the markets do not appear overly concerned, as payroll reports often sag in March. On a more positive note, wage growth improved to 0.3%, up from 0.1% a month earlier. This release matched the estimate. The improvement is likely to reinforce sentiment that the Fed could press the rate trigger four times in 2018, which could push the US dollar higher.

Japanese Prime Minister Shinzo Abe will meet with Prime Minister Trump later this month in Florida, and Japanese officials are bracing for what could be difficult trade talks. Trump signed a free-trade deal with South Korea in March, and the agreement included a side deal to prevent currency devaluation, and the US could demand similar provisions with the Abe government, which has adopted an ultra-accommodative monetary policy that has kept the yen at low levels. Trump may also demand a bilateral free-trade agreement between the two countries, rather than the multilateral approach favored by Tokyo.

Another Freaky Friday

Trade Spat Fallout To Direct Markets

USD/JPY Fundamentals

 Sunday (April 8)

  • 19:50 Japanese Current Account. Estimate 1.39T. Actual 1.02T

Monday (April 9)

  • 1:03 Japanese Consumer Confidence. Estimate 44.6. Actual 44.3
  • 2:00 Japanese Economy Watchers Sentiment. Estimate 48.1. Actual 48.9

Tuesday (April 10)

  • 2:00 Japanese Preliminary Machine Tool Orders
  • 8:30 US PPI. Estimate 0.1%
  • 8:30 US Core PPI. Estimate 0.2%
  • 19:50 Japanese Bank Lending. Estimate 2.1%
  • 19:50 Japanese Core Machinery Orders. Estimate -2.4%
  • 19:50 Japanese PPI. Estimate 2.1%

*All release times are EST

*Key events are in bold

USD/JPY for Monday, April 9, 2018

USD/JPY April 9 at 12:20 EST

Open: 106.93 High: 107.20 Low: 106.80 Close: 107.10

USD/JPY Technical

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

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

  • 106.64 is providing support
  • 107.29 was tested earlier in resistance and is a weak line

Further levels in both directions:

  • Below: 106.64, 105.53, 104.32 and 103.09
  • Above: 107.29, 108.00 and 108.89
  • Current range: 106.64 to 107.29

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (68%). 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.