USD/JPY – Japanese yen edges higher as consumer income climbs

USD/JPY has posted considerable losses on Wednesday. In the North American session, USD/JPY is trading at 108.22, down 0.48% on the day. In economic news, Japanese Average Cash Earnings jumped to 2.0% in November, up from 1.5% a month earlier. This easily beat the estimate of 1.3%. In the U.S, the key event is the minutes from the Fed policy meeting in December. On Thursday, the U.S. releases unemployment claims and Fed Chair Powell will speak at an event in Washington. Japan will publish household spending.

The Federal Reserve will be in the spotlight, with the release of the FOMC minutes later on Monday. At the December policy meeting, the Fed raised rates by a quarter point, to a range between 2.25% and 2.50%. This ended a very aggressive 2018 for the Fed, which hiked rates four times. The December rate statement hinted that further rates were in the works for 2019, but a sharp drop in the stock markets has forced the Fed to adjust, and Fed Chair Powell was quite dovish in remarks last week, which were well received by investors. The Fed forecast is calling for two more hikes this year, but the markets are doubtful, with some analysts predicting a rate cut late in the year. It will be interesting to see the views of policymakers in the minutes and the reaction of the markets.

Investor optimism is higher this week, as hopes are high that trade tensions between the U.S. and China could ease. The world’s two largest economies have been engaged in a nasty tariff spat, which has rocked the markets in recent weeks and threatens to put a chill on global growth. Chinese and U.S. officials were scheduled to hold a two day meeting at the start of the week, but the talks were extended for a third day on Wednesday. This has raised hopes that the sides are making progress. The stakes are high, as President Trump has threatened to impose higher tariffs on $250 billion worth of Chinese products if there is no deal by March 1. If the nasty trade war shows signs of easing, risk appetite could grow and make the safe-haven yen less attractive.

Rare winning streak continues into Wednesday

Markets higher ahead of Fed minutes

USD/JPY Fundamentals

Tuesday (January 8)

  • 19:00 Japanese Average Cash Earnings. Estimate 1.3%. Actual 2.0%

Wednesday (January 9)

  • 9:00 FOMC Member Evan Speaks
  • 10:30 US Crude Oil Inventories. Estimate -2.4M. Actual -1.7M
  • 11:30 US FOMC Member Rosengren Speaks
  • 13:01 US 10-year Bond Auction
  • 14:00 US FOMC Meeting Minutes
  • 22:35 Japanese 30-year Bond Auction

Thursday (January 10)

  • 8:30 US Unemployment Claims. Estimate 226K
  • 12:00 US Fed Chair Powell Speaks
  • 18:30 Japanese Household Spending. Estimate 0.0%

*All release times are EST

*Key events are in bold

USD/JPY for Wednesday, January 9, 2019

USD/JPY January 9 at 10:35 EST

Open: 108.73 High: 109.00 Low: 108.49 Close: 108.22

USD/JPY Technical

S3 S2 S1 R1 R2 R3
105.66 106.88 108.11 109.37 110.28 110.95

USD/JPY posted small gains in the Asian session and was flat in European trade. In the North American session, the pair has dropped considerably

  • 108.11 has weakened in support. It could be tested in the North American session
  • 109.37 is the next resistance line
  • Current range: 108.11 to 109.37

Further levels in both directions:

  • Below: 108.11, 106.88, 105.66 and 104.64
  • Above: 109.37, 110.28 and 110.95

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.