The Japanese yen has moved lower in the Thursday session. In North American trade, USD/JPY is trading at 113.59, up 0.27% on the day. In the U.S, unemployment claims dropped sharply to 206 thousand, well below the estimate of 226 thousand. Later in the day, Japan releases key services and manufacturing data. The Tankan manufacturing index is expected to tick lower to 18, and the Tankan services index is also forecast to drop to 21 points. On Friday, the U.S. releases retail sales reports.
Japan’s manufacturing sector is being squeezed by the ongoing U.S-China trade war, which is having a chilling effect on the Japanese economy. With Japanese exports to the U.S. and China facing higher tariffs, it’s not surprising that recent manufacturing reports have been soft. Next up is the Tankan Manufacturing index, which is published every quarter. The index has dropped for three consecutive quarters and another decline is expected in Q3, which is expected to drop from 19 to 18 points.
U.S. inflation was flat in November, dropping from 0.3 percent a month earlier. This marked the lowest level since May. Core CPI remained pegged at 0.2 percent. The weak readings can be attributed to falling oil prices, which has led to a sharp decline in gasoline prices. On an annualized basis, inflation gained 2.2 percent in November, down from 2.5 percent in October. With the U.S. economy showing signs of slowing down, and the global trade war taking a bite out of the global economy, inflation could continue to head lower as we head into 2019. This has led to a reassessment at the Federal Reserve of monetary policy. Earlier in the year, the Fed was sending messages that it would raise rates three or four times next year. This has been drastically scaled back, with some analysts predicting only one rate hike in 2019.
Thursday (December 13)
- 8:30 US Unemployment Claims. Estimate 226K. Actual 206K
- 8:30 US Import Prices. Estimate -1.0%. Estimate -1.6%
- 10:30 US Natural Gas Storage. Estimate -81B. Actual -77B
- 13:01 US 30-year Bond Auction
- 14:00 US Federal Budget Balance. Estimate -193.5B
- 18:50 Japanese Tankan Manufacturing Index. Estimate 18
- 18:50 Japanese Tankan Non-Manufacturing Index. Estimate 21
- 19:30 Japanese Flash Manufacturing PMI. Estimate 52.3
- 23:30 Japanese Revised Industrial Production. Estimate 2.8%
Friday (December 14)
- 8:30 US Core Retail Sales. Estimate 0.2%
- 8:30 US Retail Sales. Estimate 0.1%
*All release times are EST
*Key events are in bold
USD/JPY for Thursday, December 13, 2018
USD/JPY December 13 at 10:50 EST
Open: 113.28 High: 113.62 Low: 113.21 Close: 113.59
USD/JPY posted small gains in the Asian session but was flat in European trade. The pair has ticked higher in North American trade
- 112.30 is providing support
- 113.75 is a weak resistance 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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