USD/JPY – Japanese yen steady ahead of Fed, BoJ rate statements

The Japanese yen is unchanged in the Wednesday session. In the North American session, USD/JPY is trading at 110.42, up 0.05% on the day. On the release front, there are no Japanese events on the schedule. In the US, inflation reports were positive. The Producer Price Index jumped to 0.5%, well above the estimate of 0.1%. This marked the highest gain since April 2017. Core PPI edged up to 0.3%, above the forecast of 0.2% percent. Later in the day, the Federal Reserve is expected to raise rates by a quarter-point and will release a rate statement. 

The Trump-Kim summit continues to dominate the headlines, as it marked the first time that leaders of the United States and North Korea met face-to-face. However, the joint statement put out by Presidents Trump and Kim was short on details, which could explain a lack of movement in the currency markets following the summit. The joint statement reaffirmed North Korea’s full commitment to complete denuclearization, but there was no mention of a timetable or any verification mechanisms. Even if the summit was largely symbolic, 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. Japan is carefully watching developments as they unfold, and is clearly worried after Trump abruptly announced an end to war exercises between the U.S and South Korea, in a significant gesture of goodwill towards North Korea.

Central banks will be in the spotlight this week, with rate statements from the Federal Reserve and the Bank of Japan. The Fed is widely expected to raise the benchmark rate to a range between 1.75% and 2.0%. The Fed is widely expected to raise rates to a range between 1.75% and 2.0%. The odds of a quarter-point move stand at 96% percent, according to the CME Group. Although a rate hike has been priced in by the markets, such a significant move could boost the US dollar against its rivals. Investors are still uncertain whether the Fed will raise rates three or four times in 2018. Investors will be paying close attention to the rate statement and the “dot-plot” forecasts, looking for any clues regarding rate hikes in the second half of 2018. The Fed is currently projecting a total of three hikes this year, but a strong economy and rising inflation have raised speculation that the Fed could raise rates four times in 2018. The Bank of Japan is expected to maintain rates at -0.10%, and BoJ Governor Haruhiko Kuroda will hold a press conference. The markets are not expecting anything dramatic, as Kuroda will likely reiterate that the bank is committed to its massive easing policy until inflation levels move closer to the BoJ target of just under 2 percent.

  Economic Projections Key as Fed Seen Hiking Rates

  U.S Producer price index

USD/JPY Fundamentals

Wednesday (June 13)

  • 8:30 US PPI. Estimate 0.3%. Actual 0.5%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  • 10:30 US Crude Oil Inventories. Estimate -1.4M
  • 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

Thursday (June 14)

  • 8:30 US Core Retail Sales. Estimate 0.5%
  • 8:30 US Retail Sales. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 223K
  • Tentative – BoJ Monetary Policy Statement
  • Tentative – BoJ Policy Rate. Estimate -0.10%

Friday (June 15)

  • Tentative – BoJ Press Conference

*All release times are DST

*Key events are in bold

 

USD/JPY for Wednesday, June 13, 2018

USD/JPY June 13 at 10:55 DST

Open: 110.38 High: 110.72 Low: 110.35 Close: 110.42

 

USD/JPY Technical

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

USD/JPY edged higher in the Asian session but gave up most of these gains in European trade. The pair has ticked lower in the North American session

  • 110.11 was tested earlier in support
  • 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 continues to show little movement this week. Currently, long positions have a majority (60%), 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.