USD/JPY – Japanese Yen Dips as US Jobless Claims Improve

USD/JPY has posted considerable gains on Thursday, erasing the losses which marked the Wednesday session. In North American trade, USD/JPY is trading at 107.32, up 0.49% on the day. On the release front, there are no Japanese events on the schedule. In the US, unemployment claims dropped to 233 thousand, very close to the estimate of 231 thousand. On Friday, the US releases the UoM Consumer Sentiment report.

Tensions in the Middle East are growing by the hour, but investors haven’t thrown in the towel and snapped up the safe-haven Japanese yen, at least just yet. However, the markets are casting a worried eye on Syria, which is bracing for a US strike. US President Trump has promised to punish the Syrian regime for an alleged chemical attack by government forces last weekend. For its part, Russia has countered that it will respond to any US move against Syria. Relations between the US and Russia could deteriorate if Trump makes good on his promise, and investor risk appetite could sink and boost the Japanese currency.

The Federal Reserve minutes had a generally hawkish tone and this helped support the US dollar. All of the Fed policymakers indicated that the US economy would continue to improve and that inflation would rise in the next few months. At the March meeting, the Fed unanimously voted to raise rates by a quarter-point, bringing the benchmark rate to a range between 1.50% and 1.75%. The Fed projection for rate policy in 2018 remains at three hikes, although there is speculation that the Fed could revise the forecast to four rate hikes. Last week, Fed Chair Jerome Powell said that the Fed would likely continue to raise rates in order to keep a lid on inflation, but added that the rate moves would be gradual. A new headache for the Fed is the escalating trade battle between the US and China, which could hurt the economy and raise consumer prices. As for the next two rate meetings, the markets expect Powell & Co. to sit tight in May and raise rates at the June meeting.

Middle East embers look set to ignite

Dollar Gains Limited by Geopolitical Risks

USD/JPY Fundamentals

Wednesday (April 11)

  • 20:30 BoJ Governor Kuroda Speaks

 Thursday (April 12)

  • 8:30 US Unemployment Claims. Estimate 231K. Actual 233K
  • 8:30 US Import Prices. Estimate 0.2%. Actual 0.0%
  • 10:30 US Natural Gas Storage. Estimate -11B. Actual
  • 13:01 US 30-year Bond Auction. 

 Friday (April 13)

  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.6

*All release times are EST

*Key events are in bold

 

USD/JPY for Thursday, April 12, 2018

USD/JPY April 12 at 10:50 EST

Open: 106.79 High: 107.43 Low: 106.70 Close: 107.32

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
105.53 106.64 107.29 108.00 108.89 110.11

USD/JPY inched higher in the Asian session. The pair moved higher in the European session and continues to head upwards in the North American session

  • 107.29 has switched to a support role following gains by USD/JPY on Thursday
  • 108.00 is the next resistance line

Further levels in both directions:

  • Below: 107.29, 106.64, 105.53 and 104.32
  • Above: 108.00, 108.89 and 110.11
  • Current range: 107.29 to 108.00

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Thursday session. Currently, long positions have a majority (68%), indicative of trader bias towards USD/JPY continuing to move 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.