USD/JPY – Japanese Yen Shrugs as US Retail Sales Jump

USD/JPY is trading sideways in the Monday session. In North American trade, USD/JPY is trading at 107.25, down 0.10% on the day. On the release front, there are no Japanese events on the schedule. In the US, Core Retail Sales remained unchanged at 0.2%, matching the forecast. Retail Sales impressed with a gain of 0.6%, above the estimate of 0.4%. This followed two straight declines. On Tuesday, the key event is US Building Permits.

It was a dramatic weekend, as a US-led strike destroyed several chemical installations in Syria. Predictably, Syria and Russia strongly condemned the attack, but are unlikely to retaliate despite the rhetoric. The markets had already priced in an attack, and are hopeful that Trump’s declaration of “mission accomplished” means that things will remain relatively quiet in Syria. However, further chemical attacks by the Syrian regime could trigger a response from the US and its allies, which could result in volatility in the markets and boost the safe-haven Japanese yen.

In Japan, the government’s monthly economic report indicated that the economy was “gradually recovering”, identical to the statement a month earlier. The report also noted that consumer spending was “recovering”. The economy continues to expand, but the markets are braced for a slowdown in the first quarter. Annualized growth in the fourth quarter was 1.6%, but that is expected to fall sharply to 0.5% in Q1 of 2018. Inflation has been hovering around 1%, well short of the Bank of Japan target of 2%. Until inflation gathers steam, the BoJ is unlikely to tighten its ultra-accommodative monetary policy.

USD/JPY Fundamentals

 Monday (April 16)

  • 8:30 US Core Retail Sales. Estimate 0.2%. Actual 0.2%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.6%
  • 8:30 US Empire State Manufacturing Index. Estimate 19.8. Actual 15.8
  • 10:00 US Business Inventories. Estimate 0.6%. Actual 0.6%
  • 10:00 US NAHB Housing Market Index. Estimate 71. Actual 69
  • 13:15 US FOMC Member Raphael Bostic Speaks
  • 16:00 US TIC Long-Term Purchases

 Tuesday (April 17)

  • 00:30 Japanese Revised Industrial Production. Estimate 4.0%
  • 8:30 US Building Permits. Estimate 1.33M
  • 8:30 US Housing Starts. Estimate 1.27M
  • 19:50 Japanese Trade Balance. Estimate 0.10T

*All release times are EST

*Key events are in bold

USD/JPY for Monday, April 16, 2018

USD/JPY April 16 at 11:30 EST

Open: 107.36 High: 107.61 Low: 107.13 Close: 107.25

USD/JPY Technical

S3 S2 S1 R1 R2 R3
104.32 105.53 106.64 107.29 108.00 108.89

In the Asian session, USD/JPY edged higher but then retracted and lost ground. The pair edged higher in the European session but has given up these gains in North American trade

  • 106.64 is providing support
  • 107.29 is under strong pressure in resistance. It could be tested in the North American session

Further levels in both directions:

  • Below: 106.64, 105.53 and 104.32
  • Above: 107.29, 108.00, 108.89 and 110.11
  • 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 (65%), This is indicative of trader bias towards USD/JPY reversing directions and moving 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.