USD/JPY – Japanese yen edges higher, ADP payrolls next

USD/JPY has edged lower in the Tuesday session, erasing the losses seen on Monday. In North American trade, the pair is trading at 113.65, down 0.27% on the day. On the release front, Japanese consumer confidence remains weak, coming in at 43.4 points. This beat the estimate of 43.0 points. There are no major releases out of the United States. On Wednesday, the U.S releases two key events – ADP nonfarm payrolls and ISM Non-Manufacturing PMI.

In the U.S, consumer spending and confidence levels remain strong. Consumer spending rose 0.3% in August, matching the forecast. The UoM Consumer Sentiment report pushed above the 100-level for the first time since March, although the reading of 100.1 missed the estimate of 100.5 points. On the inflation front, the Core PCE Price Index, which is the Federal Reserve’s preferred inflation indicator, dipped to 0.0% in August, shy of the estimate of 0.1%. This was the first time the indicator failed to post a gain since March 2017. Still, inflation remains close to the Fed’s target of 2%, so a December rate hike remains likely.

The escalating trade war between U.S and its major trading partners has left the Japanese automobile sector particularly vulnerable, as that industry is highly dependent on open, tariff-free borders. On a positive note, Japan and the U.S have agreed to start trade talks, which will keep Japan’s auto sector protected from U.S tariffs, at least for the time being. President Trump has vowed to redress the $69 billion trade surplus that Japan has with the U.S., although Japan has balked at signing a free trade deal with the U.S, as it prefers a multilateral trade agreement. However, Trump has just signed free trade agreements with Canada and Mexico, and can be expected to insist on a bilateral pact with Japan.

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Risk sentiment is shifting and headline-driven

USD/JPY Fundamentals

Tuesday (October 2)

  • 1:00 Japanese Consumer Confidence. Estimate 43.0. Actual 43.4
  • All Day – US Total Vehicles
  • 12:45 US Fed Chair Powell Speaks

Wednesday (October 3)

  • 8:15 ADP Nonfarm Employment Change. Estimate 187K
  • 10:00 US ISM Nonfarm Manufacturing PMI. Estimate 58.1
  • 16:00 US Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

 

USD/JPY for Tuesday, October 2, 2018

USD/JPY October 2 at 11:15 DST

Open: 113.95 High: 114.02 Low: 113.61 Close: 113.65

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.21 111.22 112.30 113.75 114.73 115.51

USD/JPY showed little movement in the Asian session. In European trade, the pair edged lower but recovered most of these losses. USD/JPY has dropped further in the North American session

  • 112.30 is providing support
  • 113.75 has switched to resistance after USD/JPY lost ground on Tuesday

Further levels in both directions:

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

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.