USD/JPY – Japanese yen ticks lower as U.S markets off for Thanksgiving

The Japanese yen has ticked higher in the Thursday session. In North American trade, USD/JPY is trading at 112.95, down 0.11% on the day. On the release front, Japanese National Core CPI posted a gain of 1.0%, unchanged from the previous release. This matched the forecast. Later in the day, Japan releases Flash Manufacturing PMI, which is expected to tick lower to 53.0 points. Markets and banks in the U.S. are closed for the Thanksgiving holiday and there are no U.S events on the schedule.

Japanese National Core CPI, which removes volatile food prices, is a reliable gauge of consumer inflation. The reading of 1.0% (on an annualized basis) pointed to continued weakness in inflation, which remains far below the Bank of Japan target of around 2 percent. Inflation could face further headwinds, as the slowdown in China and the ongoing global trade war takes a bite out of the country’s export sector. As well, lower oil prices could also hamper inflation. There is little reason to expect that inflation will gather any upward momentum and some analysts are forecasting that Core CPI will fall below the 1 percent level.

Investors will be catching their breath on the Thanksgiving holiday, after a tumultuous week on the stock markets. The meltdown on Tuesday has raised questions about the Federal Reserve’s monetary policy. The markets had expected the Fed to raise rates up to four times in 2019, but with more signs that the U.S. economy could slow in 2019, policymakers may ease up on the pace of rate hikes. The Federal Reserve remains on track to gradually raise rates in 2019, but the pace could be slower than anticipated just a few weeks ago. There’s no denying that the U.S economy is currently in great shape, with unemployment at historically low levels and the $1.5 trillion tax cut package boosting economic growth. However, the rosy picture could change next year. The U.S-China trade war is expected to take a bite out of U.S growth, and the stimulus from the tax cut will fade over time. Economic growth has been slowing, with third-quarter growth expected at 2.7%, down from 3.5% in the second quarter. A rate increase in December remains a strong possibility, with the odds of a rate hike standing at 76%.

European update – Markets slip on US holiday

OANDA Trading market musings

USD/JPY Fundamentals

Wednesday (November 21)

  • 18:30 Japanese National Core CPI.  Estimate 1.0%. Actual 1.0%

Thursday (November 22)

  • 19:30 Japanese Flash Manufacturing PMI. Estimate 53.0

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, November 22, 2018

USD/JPY November 22 at 10:05 EST

Open: 113.06 High: 113.22 Low: 112.89 Close: 112.97

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.28 111.20 112.30 113.75 114.73 115.50

USD/JPY showed little movement in the Asian session. The pair posted ticked lower in the European session and is flat in North American trade

  • 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

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.