USD/JPY – Yen shrugs off lower Japanese trade balance

It has been an uneventful week for the yen and that trend has continued in the Thursday session. In the North American session, USD/JPY is trading at 110.77, up 0.02% on the day. On the release front, Japan’s trade surplus with the US dropped 22.1% in July. It was a busy day for U.S indicators. Building Permits improved to 1.31 million, matching the estimate. Housing starts remained at 1.17 million, short of the estimate of 1.27 million. On the manufacturing front, the Philly Manufacturing Index dropped sharply to 11.9, missing the estimate of 21.9 points. Unemployment claims edged down to 212 thousand, shy of the estimate of 215 thousand. On Friday, the U.S releases Preliminary UoM Consumer Sentiment.

The imposition of U.S steel and aluminum tariffs on Japanese exporters has soured economic relations between the two economic superpowers, and Japan has warned that it could retaliate, although Japan has refrained from slapping tariffs on U.S products. The sides met last week in Washington, but there has been no breakthrough in the impasse. Japan is still smarting from the U.S decision to withdraw from the Trans-Pacific Partnership and is intensifying efforts to reduce its economic dependence on the United  States, and signed a free trade agreement with the European Union in July. Still, the U.S is Japan’s second-biggest trading partner and accounts for 19% of Japanese exports, so Japan will need to find a way to smooth relations with the unpredictable Donald Trump.

USD/JPY Fundamentals

Wednesday (August 15)

• 19:50 Japanese Trade Balance. Estimate 0.02T. Actual -0.05T

Thursday (August 16)

• 8:30 US Building Permits. Estimate 1.31M. Actual 1.31M
• 8:30 US Housing Starts. Estimate 1.27M. Actual 1.17M
• 8:30 US Philly Fed Manufacturing Index. Estimate 21.9. Actual 11.9
• 8:30 US Unemployment Claims. Estimate 215K. Actual 212K
• 10:30 US Natural Gas Storage. Estimate 30B

Friday (August 17)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, August 16, 2018

USD/JPY August 16 at 11:45 DST

Open: 110.74 High: 111.93 Low: 110.46 Close: 110.77

USD/JPY Technical

In the Asian session, USD/JPY edged lower but then recovered. The pair was flat in the European session. In North American trade, the pair posted slight losses but has recovered

• 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 and 114.73
• Current range: 110.21 to 111.22

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