USD/JPY – Japanese yen ticks lower on mixed Japanese data

The Japanese yen continues to post losses this week. In Wednesday’s North American session, USD/JPY is trading at 111.21, up 0.20% on the day. On the release front, Japanese Core Machinery Orders declined 3.7%, a smaller decline than the estimate of -5.2%. Japanese PPI edged upwards to 2.8%, matching the estimate. In the U.S, inflation reports narrowly beat their estimates. Core PPI was unchanged at 0.3%, beating the forecast of 0.2%. PPI dropped from 0.5% to 0.3%, above the estimate of 0.2%. On Thursday,  On Thursday, the U.S publishes CPI and Final CPI as well as unemployment claims.

The Bank of Japan remains cautiously optimistic about the domestic economy. On Tuesday, BoJ Governor Haruhiko Kuroda said that all nine regions of the country were showing positive growth. Kuroda said that “Japan’s economy is expected to continue expanding moderately”. The BoJ credited the positive economic outlook to strong demand for Japanese exports, a tight job market and solid consumer spending. Kuroda expressed confidence that inflation will reach the BoJ target of 2 percent, a signal that the BoJ has no intention of altering monetary policy.

Investors remain uneasy about the tariff battle being waged between the U.S and its major trading partners, particularly China. After the U.S and China imposed tariffs on each other of some $30 billion, the Trump administration has raised the ante, threatening to hit China with further tariffs on $200 billion worth of Chinese goods. China cannot retaliate in kind, since it does not import that amount of goods from the U.S. Still, the Chinese can take steps which will make it more difficult for U.S companies to do business in China. President Trump’s presence at the NATO summit will not bolster investor confidence, as Trump has lashed out at Germany and other NATO members for not paying their fair share in defense spending.

  Investors turn risk-averse on tariff war escalation

  ( Update 1) When the going gets tough, the tough get going

Tuesday (July 10)

  • 19:50 Japanese Core Machinery Orders. Estimate -5.2%. Actual -3.7%
  • 19:50 Japanese PPI. Estimate 2.8%. Actual 2.8%

Wednesday (July 11)

  • 00:30 Japanese Tertiary Industry Activity. Estimate -0.4%. Actual 0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  • 8:30 US PPI. Estimate 0.2%. Actual 0.3%
  • 10:00 US Final Wholesale Inventories. Estimate 0.5%
  • 10:30 US Crude Oil Inventories. Estimate -4.1M
  • 12:30 US FOMC Member Rafael Bostic Speaks
  • 13:01 US 10-year Bond Auction
  • 16:30 US FOMC Member John Williams Speaks

Thursday (July 12)

  • 8:30 US CPI. Estimate 0.2%
  • 8:30 US Core CPI. Estimate 0.2%
  • 8:30 US Unemployment Claims. Estimate 226K

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, July 11, 2018

USD/JPY July 11 at 10:10 DST

Open: 111.00 High: 111.31 Low: 110.77 Close: 111.21

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.13 109.21 110.21 111.22 112.30 113.75

In the Asian session, USD/JPY ticked lower but then recovered. The pair has inched higher in the European session

  • 110.21 is providing support
  • 111.22 was tested earlier in resistance. It is  under pressure and could break in the North American session

Further levels in both directions:

  • Below: 110.21, 109.21 and 108.13
  • Above: 111.22, 112.30, 113.75 and 114.73
  • Current range: 110.21 to 111.22

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.