USD/JPY – Yen listless on mixed Japanese data

The Japanese yen has ticked higher in the Monday session. In North American trade, USD/JPY is trading at 113.58, up 0.07% on the day. On the release front, Japanese numbers were a mix. Capital spending dropped to 4.5%, well off the estimate of 8.6%. In the U.S, the ISM Manufacturing PMI expanded to 59.3, above the forecast of 57.5 points.

The U.S. dollar was broadly lower on Monday, as investor risk appetite shot higher following the G-20 summit on the weekend. However, the safe-haven yen shrugged, showing little reaction. Investors gave a thumbs-up to the meeting between President Trump and Chinese President Xi Jinping, which was held on the sidelines of the G-20 summit. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on January 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and global stock markets have reacted with strong gains. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.

Japan’s manufacturing sector slowed down in November, raising concerns about the strength of the economy. Manufacturing PMI slipped to 52.2, down from 52.9 in October. The ongoing global trade war is a primary factor in the weak reading, as Japanese companies which export to the U.S. or China have been hurt by higher tariffs.  European demand for Japanese exports has also softened, and domestic demand remains fragile, as nervous consumers continue to hold tightly onto their purse strings.

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USD/JPY Fundamentals

Sunday (December 2)

• 18:50 Japanese Capital Spending. Estimate 8.6%. Actual 4.5%
• 19:30 Japanese Final Manufacturing PMI. Estimate 51.8. Actual 52.2

Monday (December 3)

• 6:30 US FOMC Member Clarida Speaks
• 8:00 US FOMC Member Quarles Speaks
• 9:15 US FOMC Member Williams Speaks
• 9:45 US Final Manufacturing PMI. Estimate 55.4. Actual 55.3
• 10:00 US ISM Manufacturing PMI. Estimate 57.5. Actual 59.3
• 10:00 US Construction Spending. Estimate 0.4%. Actual -0.1%
• 10:00 US ISM Manufacturing Prices. Estimate 70.1. Actual 60.7
• All Day – US Total Vehicle Sales. Estimate 17.3M
• 10:30 US FOMC Member Brainard Speaks
• 18:50 Japanese Monetary Base. Estimate 5.7%
• 22:35 Japanese 10-year Bond Auction

*All release times are EST

*Key events are in bold

USD/JPY for Monday, December 3, 2018

USD/JPY December 3 at 11:15 EST

Open: 113.51 High: 113.82 Low: 113.38 Close: 113.49

USD/JPY Technical

USD/JPY ticked higher in the Asian session but then retracted. The pair showed little movement in the European session and this trend has continued in the North American session

• 112.30 is providing support
• 113.75 was tested earlier in resistance and is a weak line
• Current range: 112.30 to 113.75

Further levels in both directions:

• Below: 112.30, 111.20 and 110.28
• Above: 113.75, 114.73, 115.50 and 116.55

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