USD/JPY – Japanese yen trading sideways, Tokyo Core CPI next

The Japanese yen has ticked lower in the Thursday session. In the North American session, USD/JPY is trading at 111.12, up 0.13% on the day. On the release front, durable goods reports rebounded in June, but missed their estimates. Core Durable Goods Orders improved to 0.4%, shy of the estimate of 0.5%. Durable Goods Orders posted a gain of 1.0%, short of the estimate of 3.0%. Unemployment claims climbed to 217 thousand, above the estimate of 215 thousand. Later in the day, Japan releases Tokyo Core CPI, which is expected to remain pegged at 0.7%. On Friday, the U.S releases Advance GDP and UoM Consumer Sentiment.

The Bank of Japan has stubbornly held to its inflation of target of just under 2.0%, but this goal remains elusive. This week, inflation indicators were mixed. The Services Producer Price Index improved for a third straight month, jumping to 1.2% in June. This beat the estimate of 1.0% and marked the strongest gain since March 2015. At the same time, BoJ Core Inflation, the BoJ’s preferred inflation indicator, dipped to 0.4%, its smallest gain since in 11 months. We’ll get a third look at inflation later on Wednesday, with the release of Tokyo Core CPI.

Recent trade tensions between the U.S and its trading partners have shaken investors worldwide, but the safe-haven Japanese yen has not reaped the benefits of nervous market sentiment. Investors are not rushing to buy Japanese assets at a time when Japanese interest rates remain close to zero. At the same time, if the tariff battle intensifies and the Trump administration makes good on its threats to impose further tariffs, we could see investors head for the safety of the Japanese currency.

  Risk on as US and Europe avert trade battle

  U.S-E.U calls a ceasefire in the trade war

Thursday (July 26)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%. Actual 0.4%
• 8:30 US Durable Goods Orders. Estimate 3.0%. Actual 1.0%
• 8:30 US Unemployment Claims. Estimate 215K. Actual 217K
• 8:30 US Goods Trade Balance. Estimate -67.0B. Actual 
• 8:30 US Preliminary Wholesale Inventories.  Estimate 0.5%. Actual
• 10:30 US Natural Gas Storage. Estimate 39B
• 19:30 Tokyo Core CPI. Estimate 0.7%

Friday (July 27)

• 8:30 US Advance GDP. Estimate 4.1%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.1

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, July 26, 2018

USD/JPY July 26 at 10:40 DST

Open: 110.97 High: 111.18 Low: 110.59 Close: 111.12

USD/JPY Technical

USD/JPY inched lower in the Asian session. The pair has posted small gains in the European and North American sessions

• 110.21 is providing support
• 111.22 is a weak resistance line

Further levels in both directions:

• Below: 110.21, 109.21 and 108.11
• Above: 111.22, 112.30, 113.75, 114.73 and 115.51
• Current range: 110.21 to 111.22

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