USD/JPY – Japanese Yen Jumps as Trump Comments on China Spook Investors

After a quiet start to the week, the Japanese yen has recorded sharp gains in the Wednesday session. In North American trade, USD/JPY is trading at 110.15, down 0.68% on the day. On the release front, Japanese Flash Manufacturing PMI dipped to 52.5, marking a 7-month low. This missed the estimate of 53.6 points. Japanese All Industries Activity dropped to 0.0%, shy of the estimate of 0.1%. In the US, the key event is the Federal Reserve minutes from the May policy meeting. On Thursday, the US will release unemployment claims and Existing Home Sales.

Will the leaders of the United States and Noth Korea meet for a historic summit next month? The uncertainty continues, as neither side will confirm or deny that the meeting, which is scheduled for June 12 in Singapore, will take place. Just a few days ago, President Trump sent a letter to North Korean leader Kim Jong-un, saying that Trump was canceling the much-anticipated meeting. However, the response from Pyongyang was restrained, and the White House has sent a team to Singapore in case the summit is back on. Meanwhile, the leaders of South Korea and North Korea met on the weekend. That meeting was completely unexpected and raises hopes of a breakthrough in the long conflict between the two Koreas.

On Tuesday, BoJ Governor Haruhiko Kuroda promised that the bank would be transparent with regard to an exit from its radical easing policy, but added that the markets shouldn’t hold their breath for any dramatic announcements. Kuroda said that the BoJ would “communicate specifics on how we plan to exit once inflation accelerates toward 2 percent, but reiterated that there would be no departure from policy until the inflation target was met. That goal remains elusive, as underscored by BoJ Core CPI, which fell in April for a second straight month. BoJ policymakers have been looking for ways to move away from radical easing, as ultra-low interest rates have hurt the profits of financial institutions.

  Fed Minutes to Drive Market as Trade Concerns Recede

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USD/JPY Fundamentals

Tuesday (May 22)

  • 20:30 Japanese Flash Manufacturing PMI. Estimate 53.6. Actual 52.5

Wednesday (May 23)

  • 00:30 Japanese All Industries Activity. Estimate 0.1%. Actual 0.0%
  • 9:45 US Flash Manufacturing PMI. Estimate 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9
  • 10:00 US New Home Sales. Estimate 680K
  • 10:00 US Crude Oil Inventories. Estimate -2.5M
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M
  • 19:30 Tokyo Core CPI. Estimate 0.6% 

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, May 23, 2018

USD/JPY May 23 at 9:25 DST

Open: 110.90 High: 110.92 Low: 109.56 Close: 110.15

USD/JPY Technical

S3 S2 S1 R1 R2 R3
107.29 108.00 108.89 110.11 111.22 112.06

USD/JPY edged lower in the Asian session and posted stronger losses in European trade. The pair has ticked higher early in the North American session

  • 108.89 is providing support
  • 110.11 has switched to a resistance role after strong losses by USD/JPY on Wednesday. It is a weak line

Further levels in both directions:

  • Below: 108.89, 108.00 and 107.29
  • Above: 110.11, 111.22, 112.06 and 113.39
  • Current range: 108.89 to 110.11

OANDA’s Open Positions Ratios

USD/JPY ratio is showing movement towards short positions. Currently, long positions have a majority (53%), indicative of trader bias towards USD/JPY reversing directions and moving upwards.

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.