USD/JPY continues to show little movement this week. In Tuesday’s North American session, the pair is trading at 110.63, up 0.03% on the day. On the release front, there are no major events out of the United States. Japan is expected to post a trade surplus after recording six successive deficits. On Wednesday, the FOMC releases the minutes of its January policy meeting.
China is Japan’s biggest trading partner, so it’s no surprise that the slowdown in China is having a negative impact on the Japanese economy. The manufacturing and export sectors are particularly vulnerable, with Japan exporting car parts and electronics to China. This has resulted in a string of monthly trade deficits, as the global trade war has dampened the appetite for Japanese exports. There was positive news last week, as Japan’s economy grew 0.3% in the fourth quarter, after a decline of 0.6% in the third quarter. Business and consumer spending improved, helping the economy expand. Exports rose 0.9% in Q4, the strongest growth in a year. However, if the global trade war continues, Japanese growth could dramatically fall.
Traders should treat the Federal Reserve minutes as a market-mover. Since raising rates in December, the Fed has changed direction and become much more dovish. In late 2018, there was talk of up to four rate hikes in 2019, but the Fed has revised its forecast to two hikes. The markets have gone further, projecting no rate increases this year, and there has even been talk of a rate cut in late 2019. In the January rate statement, the Fed discarded previous pledges of “further gradual increases” in interest rates, and said it would be “patient” before any further hikes.
Tuesday (February 19)
- 10:00 US NAHB Housing Market. Estimate 59. Actual 62
- 18:50 Japanese Trade Balance. Estimate 0.17T
Wednesday (February 20)
- 14:00 US FOMC Meeting Minutes
*All release times are EST
*Key events are in bold
USD/JPY for Tuesday, February 19, 2019
USD/JPY February 19 at 10:50 EST
Open: 110.61 High: 111.83 Low: 110.45 Close: 110.63
In the Asian session, USD/JPY ticked lower but reversed directions and gained ground. The pair inched higher in the European session and is showing limited movement in North American trade
- 110.28 is providing support
- 110.90 is a weak resistance line
- Current range: 110.28 to 110.90
Further levels in both directions:
- Below: 110.28, 109.37, 108.11 and 107.36
- Above: 110.90, 112.16 and 112.93
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