USD/JPY – Japanese Yen Dips to 3-Week Low on Mixed Japanese Data

The Japanese yen has posted slight losses in the Tuesday session. In the North American session, USD/JPY is trading at 110.23, up 0.18% on the day. On the release front, Japanese BSI Manufacturing Index came in at -3.2, its weakest reading in almost two years. This reading missed the estimate of 3.2 points. There was better news on the inflation front, as PPI jumped 2.7%, easily beating the forecast of 2.1%. In the US, consumer inflation numbers were within expectations. CPI remained pegged at 0.2% and Core CPI edged up to 0.2%, just above the forecast of 0.1%. On Wednesday, the US will release PPI reports and the Federal Reserve is expected to raise interest rates to a range between 1.75% and 2.00%.

The markets were braced for a bumpy meeting between the Group of Seven leaders on Friday, but the sharp disagreements between President Trump and the other six members were far worse than expected. Trump openly clashed with the other leaders over his recent tariffs against the European Union and Canada and pulled back his endorsement of the traditional post-summit statement put out by the other members. The undiplomatic Trump also tweeted that Canadian Prime Minister Trudeau, who hosted the summit, was “dishonest and weak”. Canada and the EU are furious over recent US tariffs, especially because Trump pushed them through on the basis of ‘national security’. The glaring cracks in G-7 unity could cast a long shadow on trade relations between the U.S and the “G-6”, with business confidence and capital spending at risk if the tariff spat continues. Trump has not slapped tariffs on Japan, but the export-based Japanese economy has plenty to lose if the tit-for-tat tariff battle escalates, which could snowball into a full-blown global trade war.

The leaders of the U.S and North Korea met in a historic summit in Singapore on Tuesday. The joint statement put out by leaders was short on details, but President Trump said that President Kim Jong-un had reaffirmed its full commitment to complete denuclearization of North Korea. Although the crucial issue of verification was not addressed, there’s no denying that tensions have significantly eased and that the summit could mark a first step in bringing peace to the Korean peninsula. As a close neighbor of the North Korean regime, Japan will be watching these new developments closely. North Korean missiles represent a significant threat to Japan’s security, and Japan will want to see significant de-nuclearization steps by North Korea before the U.S removes any troops from South Korea.

  It’s showtime!

  Dollar Seeks Central Bank Guidance

USD/JPY Fundamentals

Monday (June 11)

  • 19:50 Japanese BSI Manufacturing Index. Estimate 3.2. Actual -3.2
  • 19:50 Japanese PPI. Estimate 2.1%. Actual 2.7%

Tuesday (June 12)

  • 00:30 Japanese Tertiary Industry Activity. Estimate 0.6%. Actual 1.0%
  • 6:00 US NFIB Small Business Index. Estimate 105.2. Actual 107.8
  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%
  • 8:30 US Core CPI. Estimate 0.1%. Actual 0.2%
  • 13:01 US 30-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -119.0B

Wednesday (June 13)

  • 8:30 US PPI. Estimate 0.3%
  • 8:30 US Core PPI. Estimate 0.2%
  • 14:00 US FOMC Economic Projections
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.00%
  • 14:30 US FOMC Press Conference

*All release times are DST

*Key events are in bold

USD/JPY for Tuesday, June 12, 2018

USD/JPY June 12 at 10:40 DST

Open: 110.03 High: 110.49 Low: 109.99 Close: 110.23

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.00 108.89 110.11 111.22 112.06 113.39

USD/JPY edged upwards in the Asian session and inched higher in the European trade. The pair if flat in North American trade

  • 110.11 was tested earlier in support and remains a weak line
  • 111.22 is the next resistance line

Further levels in both directions:

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

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 continuing to move 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.