USD/JPY – Japanese yen slightly lower, investors await Japanese consumer releases

USD/JPY has edged lower in the Thursday session. In North American trade, the pair is trading at 109.77, down 0.19% on the day. On the release front, unemployment claims dropped to 234 thousand, but this was above the estimate of 220 thousand. Japan will release consumer data. Houshold spending has posted three successive declines, but is expected to rebound with a gain of 0.8%. Average cash earnings is forecast to slow to 0.7% in December, compared to 1.0% a month earlier. As well, Japan’s current account surplus is expected to rise to JPY 1.52 trillion.

Japanese Prime Minister Shinzo Abe and the Bank of Japan have come under fire over inflation levels, which have stubbornly remained well below the target of 2.0%, despite the BoJ’s ultra-loose monetary policy. On Wednesday, Abe defended the policy, saying it had helped create jobs and had benefited the economy. For its part, the BoJ has said that the inflation target remains elusive due to weak oil prices and the public’s deflationary mindset. Abe said that he “accepts” the BoJ’s explanation. In January, the BoJ maintained its monetary policy, but lower its inflation forecast, warning that protectionism and softer global demand posed significant risks to the Japanese economy.

President Trump’s State of the Union address was a yawner as far as the markets were concerned, but there were some points of interests for investors. Trump spoke about the U.S-China trade war, reiterating that the U.S. would demand “real structural change” from China before a trade deal could be reached. American policymakers have long demanded that China desist from intellectual theft against U.S. companies, and with China experiencing a slowdown, the Chinese may have to make concessions or face further tariffs in March. A third round of negotiations between the sides is scheduled for this month, raising hopes that the U.S. will not impose further tariffs on China in early March. Trump also announced that he will meet North Korean leader Kim in late February, an event which could bolster risk appetite and weigh on the Japanese yen.

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USD/JPY Fundamentals

Thursday (February 7)

• 00:00 Japanese Leading Indicators. Estimate 97.9%. Actual 97.9%
• 8:30 US Unemployment Claims. Estimate 220K. Actual 234K
  
• 9:30 US FOMC Member Clarida Speaks
• 10:30 US Natural Gas Storage. Estimate -228B
• 13:01 US 30-year Bond Auction
• 15:00 US Consumer Credit. Estimate 16.5B
• 18:30 Japanese Household Spending. Estimate 0.8%
• 18:50 Japanese Bank Lending. Estimate 2.4%
• 18:50 Japanese Current Account. Estimate 1.52T
• 19:00 Japanese Average Cash Earnings. Estimate 1.7%
• 19:30 US FOMC Member Bullard Speaks

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, February 7, 2019

USD/JPY February 7 at 10:50 EST

Open: 109.98 High: 110.09 Low: 109.61 Close: 109.77

USD/JPY Technical

USD/JPY posted small losses in the Asian session but then recovered. In the European session, the pair recorded small gains but then reversed directions and lost ground. USD/JPY is showing limited movement in the North American session

• 109.37 is providing support
• 110.28 is the next resistance line
• Current range: 109.37 to 110.28

Further levels in both directions:

• Below: 109.37, 108.11, 107.36 and 106.62
• Above: 110.28, 110.90 and 112.16

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