USD/JPY – Japanese Yen Trading Sideways, U.S Services PMI Climbs

The Japanese yen is unchanged in the Tuesday session. In North American trade, USD/JPY is trading at 109.84, up 0.02% on the day. On the release front, U.S manufacturing and employment reports were sharp. The ISM Non-Manufacturing PMI climbed to 58.6, beating the estimate of 57.9 points. JOLTS Job Openings improved to 6.70 million, crushing the estimate of 6.49 million. Later in the day, Japan releases Average Cash Earnings, which is expected to fall to 1.4 percent.

The Bank of Japan has steadfastly held that it will not exit its massive stimulus until inflation reaches the bank’s target of around 2 percent. Although inflation remains well below this level, a stronger economy has fueled expectations that the termination of stimulus is a question of ‘when’ rather than ‘if’. On Tuesday, Deputy Governor Masazumi Wakatabe said on Tuesday that the bank would not immediately start selling Japanese government bonds after the end of its stimulus scheme. Wakatabe said that a first priority for the BoJ would be taking care of excess liquidity. The cautious BoJ is unlikely to makes any dramatic fiscal moves, aware that even slight steps can have a strong impact on the markets and the currency exchange.

The on-again-off-again Korea nuclear summit is back on, complete with a starting time. The much-heralded meeting between President Trump and President Kim Jong-un will take place in Singapore on June 12, at 9:00 AM sharp. The summit will mark the face ever face-to-face meeting between leaders of the U.S and North Korea, but Trump has tried to lower expectations, saying that he doesn’t expect the sides to sign an agreement. Rather, the meeting would mark the start of a process. North Korea is unlikely to agree to denuclearization, but the fact that progress is being made could boost investor risk appetite and weigh on the safe-haven Japanese yen.

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USD/JPY Fundamentals

Tuesday (June 5)

• 9:45 US Final Services PMI. Estimate 55.7. Actual 56.8
• 10:00 US ISM Non-Manufacturing PMI. Estimate 57.9. Actual 58.6
• 10:00 US JOLTS Job Openings. Estimate 6.49M. Actual 6.70M
• Tentative – US IBD/TIPP Economic Optimism. Estimate 54.2
• 20:00 Japanese Average Cash Earnings. Estimate 1.4%

*All release times are DST

*Key events are in bold

USD/JPY for Tuesday, June 5, 2018

USD/JPY June 5 at 10:55 DST

Open: 109.82 High: 110.00 Low: 109.60 Close: 109.84

USD/JPY Technical

USD/JPY ticked higher in the Asian session. In the European session, the pair reversed directions and edged lower. USD/JPY has posted small gains in North American trade

• 108.89 is providing support
• 110.11 is the next resistance line

Further levels in both directions:

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

OANDA’s Open Positions Ratios

USD/JPY ratio is almost unchanged in the Tuesday session. Currently, long positions have a majority (62%), indicative of trader bias towards USD/JPY breaking out 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.