USD/JPY – Japanese yen edges higher as greenback broadly lower

The Japanese yen is slightly higher in the Thursday session. In North American trade, USD/JPY is trading at 112.74, down 0.23% on the day. On the release front, Japanese Final Manufacturing PMI improved to 52.9, but missed the forecast of 53.1 points. Japanese 10-year bonds were unchanged, with a yield 0f 0.14%. In the U.S, unemployment claims ticked lower to 214 thousand, a shade above the forecast of 213 thousand. On the manufacturing front, ISM Manufacturing PMI disappointed, as it fell to 57.7 points, shy of the estimate of 59.0 points. This marked a 6-month low. On Friday, the focus will be on U.S employment data, with the release of wage growth and nonfarm payrolls.

As expected, there were no surprises from the Bank of Japan, which wrapped up a policy meeting on Wednesday. Policymakers voted 7-2 to maintain interest rates at -0.10% and 10-year bond yields around zero. The BoJ said that it would maintain ultra-low rates for an “extended period” and that it would allow more flexibility in the movement of 10-year bonds. The bank downgraded its forecasts for inflation and growth through fiscal 2020, in essence acknowledging that its inflation target of 2 percent will not be achieved in the near future. BoJ Governor Haruhiko Kuroda said that the trade war between the U.S and China had not had a significant effect on the Japanese economy, but admitted that protectionist trade policies could hurt the economy. Aside from darkening clouds on the global front, Japan plans to introduce a sales tax shortly, one more reason that the BoJ is unlikely to wean to economy off stimulus anytime soon.

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USD/JPY Fundamentals

Wednesday (October 31)

• 8:30 Japanese Final Manufacturing PMI. Estimate 53.1. Actual 52.9
• 23:35 Japanese 10-year Bond Auction. Actual 0.14/4.3

Thursday (November 1)

• 7:30 US Challenger Job Cuts. Actual 153.6%
• 8:30 US Preliminary Productivity. Estimate 2.2%. Actual 2.2%
• 8:30 US Preliminary Unit Labor Costs. Estimate 1.1%. Actual 1.2%
• 8:30 US Unemployment Claims. Estimate 213K. Actual 214K
• 9:45 US Final Manufacturing PMI. Estimate 55.9. Actual 55.7
• 10:00 US ISM Manufacturing PMI. Estimate 59.0. Actual 57.7
• 10:00 US Construction Spending. Estimate 0.2%. Actual 0.0%
• 10:00 US ISM Manufacturing Prices. Estimate 67.5. Actual 71.6
• 10:30 US Natural Gas Storage. Estimate 53B
• All Day – US Total Vehicle Sales. Estimate 17.1M
• 19:50 Japanese Monetary Base. Estimate 6.2%

Friday (November 2)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 193K
• 8:30 US Unemployment Rate. Estimate 3.7%

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, November 1, 2018

USD/JPY November 1 at 10:45 DST

Open: 112.94 High: 113.03 Low: 112.64 Close: 112.68

USD/JPY Technical

USD/JPY showed limited movement in the Asian session. The pair inched higher in European trade but has reversed directions in the North American session

• 112.30 is providing support
• 113.75 is the next line of resistance
• Current range: 112.30 to 113.75

Further levels in both directions:

• Below: 112.30, 111.20, 110.28 and 109.32
• Above: 113.75, 114.73 and 115.50

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