USD/JPY – Japanese Yen Gains Ground as US Consumer Inflation Contracts

USD/JPY has posted losses on Wednesday, erasing the gains which marked the Tuesday session. In the North American session, USD/JPY is trading at 106.72, down 0.45% on the day. On the release front, Japanese Core Machinery Orders gained 2.0%, crushing the estimate of -2.6%. Japanese PPI dropped for a fourth straight month, coming in at 2.1%. This marked the lowest gain since June. In the US, CPI declined 0.1%, shy of the estimate of 0.0%. This marked the first decline since May. Core CPI remained unchanged at 0.2%. Later in the day, the Federal Reserve will release the minutes of the March policy meeting.

As relations between the US and Russia continue to worsen, the markets are growing nervous, which could be a boon for the safe-haven Japanese currency. Syrian forces allegedly used chemical weapons on rebel-held areas last week, and a UN Security Council meeting on Tuesday ended inconclusively after Russia cast a veto on a US proposal to prove the attack. US President Trump has warned of an imminent military strike against Syria, and Russia has countered that it will respond to any US move. If Trump makes good on his promise, investor risk appetite could sink and send the Japanese yen higher.

The tariff spat between the US and China appears far from over, but both sides have lowered the flames which has roiled the markets in recent weeks. Investors are breathing a sigh of relief after Chinese President Xi Jimping sent out a conciliatory message on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.

Xi is music to the markets ears

Syria Risks Offset Trade Truce

USD/JPY Fundamentals

Tuesday (April 10)

  • 19:50 Japanese Bank Lending. Estimate 2.1%. Actual 2.0%
  • 19:50 Japanese Core Machinery Orders. Estimate -2.6%. Actual 2.1%
  • 19:50 Japanese PPI. Estimate 2.1%. Actual 2.1%

Wednesday (April 11)

  • 8:30 US CPI. Estimate 0.0%
  • 8:30 US Core CPI. Estimate 0.2%
  • 10:30 US Crude Oil Inventories. Estimate -0.6M
  • 13:01 US 10-year Bond Auction
  • 14:00 US FOMC Meeting Minutes
  • 14:00 US Federal Budget Balance. Estimate -191B
  • 20:30 BoJ Governor Kuroda Speaks

 Thursday (April 12)

  • 8:30 US Unemployment Claims. Estimate 231K
  • 23:45 Japanese 30-year Bond Auction  

*All release times are EST

*Key events are in bold

USD/JPY for Wednesday, April 11, 2018

USD/JPY April 11 at 10:45 EST

Open: 107.20 High: 107.25 Low: 106.68 Close: 106.72

USD/JPY Technical

S3 S2 S1 R1 R2 R3
104.32 10.5.53 106.64 107.29 108.00 108.89

USD/JPY ticked lower in the Asian session. The pair has moved lower in the European and North American sessions

  • 106.64 is providing weak support
  • 107.29 is the next resistance 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

USD/JPY ratio is showing little movement in the Wednesday session. Currently, long positions have a majority (68%), indicative of trader bias towards USD/JPY reversing ground 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

Latest posts by Kenny Fisher (see all)