The Japanese yen has ticked lower in the Wednesday session. In North American trade, USD/JPY is trading at 110.23, up 0.23% on the day. On the release front, Japanese Average Cash Earnings is expected to drop sharply to 0.8%. There are no key U.S indicators on the schedule. On Thursday, the U.S releases unemployment claims and Japan publishes current account and Final GDP.
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 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 make any dramatic fiscal moves, aware that even slight steps can have a strong impact on the markets and the currency exchange.
Japan is keeping a close eye on the upcoming summit between US President Trump and North Korean President Kim Jong-un next week in Singapore. The meeting will mark the first ever face-to-face meeting between leaders of the U.S and North Korea. Trump has tried to lower expectations, saying the sides are unlikely to reach an agreement on North Korea relinquishing its nuclear weapons. Still, the fact that the two leaders are meeting is a sign that significant progress is being made in the long-standing dispute in the Korean peninsula. North Korean missiles represent a significant threat to Japan’s security, and Japanese Prime Minister Abe is expected to press Japan’s concerns when he meets with Trump ahead of the summit.
USD/JPY Fundamentals
Tuesday (June 5)
- 20:00 Japanese Average Cash Earnings. Estimate 1.4%. Actual 0.8%
Wednesday (June 6)
- 8:30 US Revised Nonfarm Productivity. Estimate 0.7%. Actual 0.4%
- 8:30 US Revised Unit Labor Costs. Estimate 2.7%. Actual 2.9%
- 8:30 US Trade Balance. Estimate -50.0B. Actual -46.2B
- 10:30 US Crude Oil Inventories. Estimate -2.0M. Actual 2.1M
Thursday (June 7)
- 8:30 US Unemployment Claims. Estimate 223K
- 19:30 Japanese Current Account. Estimate 2.10T
- 19:30 Japanese Final GDP. Estimate -0.1%
*All release times are DST
*Key events are in bold
USD/JPY for Wednesday, June 6, 2018
USD/JPY June 6 at 11:10 DST
Open: 109.80 High: 110.23 Low: 109.79 Close: 110.03
USD/JPY Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 107.29 | 108.00 | 108.89 | 110.11 | 111.22 | 112.06 |
USD/JPY was flat in the Asian session and posted small gains in European trade. In the North American session, the pair reversed directions and edged lower. USD/JPY has reversed directions and posted small losses in North American trade
- 108.89 is providing support
- 110.11 has switched to a resistance role after gains by USD/JPY on Wednesday. It is a weak 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 showing little movement this week. Currently, long positions have a majority (60%), 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.
Kenny Fisher