USD/JPY – Japanese yen edges lower, markets eye Kuroda speech at G-20

USD/JPY has edged higher in the Tuesday session, recovering most of the losses seen on Monday. In the North American session, the pair is trading at 108.47, up 0.29% on the day. In economic news, Japanese Preliminary Machine Tool Orders posted a third successive decline, with a reading of -18.3%. Later in the day, BoJ Governor Kuroda will deliver a speech at the G-20 symposium in Tokyo, which should be treated as a market-mover. In the U.S., producer inflation declined in December, as PPI and Core PPI both missed their estimates.

The yen started the New Year with strong gains, but the rally has taken a pause, as risk apprehension has subsided. Is this the calm before the storm? China released soft data on Monday, as the world’s second largest economy continues to show signs of a slowdown. Chinese exports down 4.4 percent from a year earlier and imports plunging 7.6 percent. A decline in China could send the Japanese economy into recession, as the export and manufacturing sectors are heavily dependent on Chinese demand.

The Federal Reserve has made a U-turn on monetary policy, but by how much? There is a large discrepancy between Fed forecasts and market expectations, which could result in volatility in the currency markets, as traders try to figure out what the Fed will do in 2019. The most recent projections from individual policymakers in the Federal Open Market Committee (FOMC) stands at two rate hikes this year, but the markets are expecting the Fed to hold pat and not raise rates in 2019. Moreover, the markets have priced in a rate cut before the end of the year at 28 percent. On Monday, former Fed Chair Janet Yellen said that she expected the Fed to take a breather, saying that it’s ‘very possible’ that the Fed has made its last hike of this cycle.

Markets flat ahead of Brexit vote

Empire State Manufacturing Survey declines to 3.9 v 10.0 eyed, lowest level in over a year

USD/JPY Fundamentals

Tuesday (January 15)

  • 00:58 Japanese Preliminary Machine Tool Orders. Actual -18.3%
  • 8:30 US PPI. Estimate -0.1%. Actual -0.2%.
  • 8:30 US Core PPI. Estimate 0.2%. Actual -0.1%
  • 8:30 US Empire State Manufacturing Index. Estimate 11.6. Actual 3.9
  • 10:00 US IBD/TIPP Economic Optimism. Actual 53.1
  • 13:00 US FOMC Member George Speaks

Wednesday (January 16)

  • 22:20 BoJ Governor Kuroda Speaks

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, January 15, 2019

USD/JPY January 15 at 10:15 EST

Open: 108.16 High: 108.75 Low: 108.14 Close: 108.47

USD/JPY Technical

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

USD/JPY edged higher in the Asian session. The pair posted small gains in the European session but then retracted. USD/JPY has been marked by choppy movement early in the North American session

  • 108.11 is providing support
  • 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.