USD/JPY – Japanese Yen Steady, Housing Report Sparkles

The Japanese yen has posted gains in the Thursday session. In North American trade, USD/JPY is trading at 108.62, down 0.26% on the day. On the release front, it’s a busy day. Japanese Housing Starts surprised with a gain of 0.3%, ending a nasty streak of nine straight declines. This easily beat the estimate of -8.8 percent. Later in the day, Japan releases Capital Spending, which is expected to drop to 3.2%, and Final Manufacturing PMI, which is forecast to fall to 52.5 points. In the US, Personal Spending and PCE Price Index both beat their estimates. Unemployment claims dropped sharply to 221 thousand, beating the estimate of 228 thousand. On Friday, the focus will be on employment data, with the release of nonfarm payrolls and wage growth.

Is the Federal Reserve moving closer to a neutral monetary policy? Recent statements by FOMC policymakers appear to support such a conclusion, which would mean that the Fed would let the economy ‘ride on its own steam’ without intervening by adjusting interest rates. In the meantime, the Fed continues to project two more rate hikes in 2018, after raising rates by a quarter-point in March. The most likely dates for a rate hike are June and September. A fourth hike in December is possible, with a likelihood of about 40%. The minutes of the May meeting noted that policymakers would consider allowing inflation to rise above the Fed’s 2% target for a temporary period, which means that the Fed would not rush to raise rates based on the inflation target.

The Bank of Japan remains officially committed to continuing its radical easing policy and negative interest rates until inflation rises closer to the bank’s target of around 2 percent. At the same time, BoJ policymakers have been looking for ways to move away from radical easing, in part because ultra-low interest rates have hurt the profits of financial institutions. BoJ Governor Haruhiko Kuroda has promised that the bank would be transparent with regard to an exit from its radical easing policy, as Kuroda is well aware that even a slight change in fiscal or monetary policy can have a dramatic impact on the markets, a scenario that the BoJ is keen to avoid.

  Conciliante

USD/JPY Fundamentals

Thursday (May 31)

  • 1:00 Japanese Housing Starts. Estimate -8.8%. Actual 0.3%
  • 7:30 US Challenger Job Cuts. Actual -4.8%
  • 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2
  • 8:30 US Personal Spending. Estimate 0.4%. Actual 0.6%
  • 8:30 US Unemployment Claims. Estimate 228K. Actual 221K
  • 8:30 US Personal Income. Estimate 0.3%. Actual 0.3%
  • 9:45 US Chicago PMI. Estimate 58.2
  • 10:00 US Pending Home Sales. Estimate 0.4%
  • 10:30 US Natural Gas Storage. Estimate 100B
  • 11:00 US Crude Oil Inventories. Estimate -0.4M
  • 12:45 US FOMC Member Rafael Bostic Speaks
  • 13:00 US FOMC Member Lael Brainard Speaks
  • 19:50 Japanese Capital Spending. Estimate 3.2%
  • 20:30 Japanese Final Manufacturing PMI. Estimate 52.5

Friday (June 1)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 189K
  • 8:30 US Unemployment Rate. Estimate 3.9%

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, May 31, 2018

USD/JPY May 30 at 11:05 DST

Open: 108.91 High: 109.00 Low: 108.39 Close: 108.62

USD/JPY Technical

S3 S2 S1 R1 R2 R3
106.09 107.29 108.00 108.89 110.11 111.22

USD/JPY ticked lower in the Asian session and recovered in European trade. The pair has edged lower in North American trade

  • 108.00 is providing support
  • 108.89 has switched to a resistance role after USD/JPY has lost ground on Thursday

Further levels in both directions:

  • Below: 108.00, 107.29 and 106.09
  • Above: 108.89, 110.11, 111.22 and 112.06
  • Current range: 108.00 to 108.89

OANDA’s Open Positions Ratios

In the Thursday session, USD/JPY ratio is showing long positions with a majority (56%). This is 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

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 Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.