USD/JPY – Yen steady as US GDP within expectations, Japanese retail sales next

The Japanese yen is steady in the Wednesday session. In North American trade, the pair is trading at 111.45, up 0.23% on the day. On the release front, Japanese consumer confidence edged lower to 43.3, just below the estimate of 43.4 points. In the U.S, Preliminary GDP jumped 4.2%, beating the estimate of 4.1%. Pending Home Sales disappointed with a reading of -0.7%, well off the estimate of 0.3%. Later in the day, Japan releases retail sales, which is expected to drop to 1.3%. On Thursday, the U.S publishes personal spending and unemployment claims. Japan will release Tokyo Core CPI.

The U.S economy continues to sparkle. Preliminary GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations.

Japanese inflation numbers have been a mix this week. BoJ Core CPI, the Bank of Japan’s preferred inflation indicator, improved to 0.5%. Earlier in the week, National Core CPI remained pegged at 0.8%, shy of the estimate of 0.9%. The Services Producer Price Index edged lower to 1.1%, missing the estimate of 1.2%. Despite an ultra-accommodative monetary policy, inflation remains well below the BoJ target of just below 2 percent. Rather than reduce the inflation target, the Bank will likely postpone yet again the timeline for its 2% target to fiscal year 2020 or beyond. Massive quantitative and qualitative easing have failed to coax inflation higher, so policymakers may have to consider other means of fiscal easing in order to encourage more spending and push inflation higher. The markets will get another look at inflation on Thursday, with the release of Tokyo Core CPI. The indicator is expected to remain unchanged at 0.8%.

Q2 U.S GDP beats expectations

USD/JPY Fundamentals

Wednesday (August 29)

  • 1:00 Japanese Consumer Confidence. Estimate 43.4. Actual 43.3
  • 8:30 US Preliminary GDP. Estimate 4.0%. Actual 4.2%
  • 8:30 US Preliminary GDP Price Index. Estimate 3.0%. Actual 3.0%
  • 10:00 US Pending Home Sales. Estimate 0.3%
  • 10:30 US Crude Oil Inventories. Estimate -0.7M
  • 19:50 Japanese Retail Sales. Estimate 1.3%

Thursday (August 30)

  • 8:30 US Personal Spending. Estimate 0.4%
  • 8:30 US Unemployment Claims. Estimate 214K
  • 19:30 Japanese Tokyo Core CPI. Estimate 0.8%

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, August 29, 2018

USD/JPY August 29 at 10:05 DST

Open: 111.19 High: 111.39 Low: 111.12 Close: 111.50

USD/JPY Technical

S3 S2 S1 R1 R2 R3
109.21 110.21 111.22 112.30 113.75 114.73

USD/JPY showed little movement in the Asian session. The pair posted small gains in European trade and this trend continues in the North American session

  • 111.22 is providing support
  • 112.30 is the next resistance earlier

Further levels in both directions:

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

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.