USD/JPY – Japanese yen slips as Tankan Manufacturing Index slides

USD/JPY has lost ground on Monday. In the North American session, the pair is trading at 111.26, up 0.37% on the day. On the release front, the Tankan indices slowed in the fourth quarter, but were within expectations. In the U.S., retail sales and core retail sales both declined and missed their forecasts. On Tuesday, the U.S. releases durable goods orders.

The well-respected Japanese Tankan indices pointed to weaker economic activity in the fourth quarter. This was particularly glaring in manufacturing, as the Tankan index slumped to 12 points, down from 19 points in the third quarter. This was the weakest score since 2013. The slowdown in the services index was less pronounced – falling from 24 in Q3 to 21 in Q4. The steep drop in manufacturing was expected, as less global demand for Japanese exports has taken a bite out of manufacturing activity.

There was pressure on the yen on Monday as good news out of China raised risk appetite. Chinese Caixin Manufacturing PMI didn’t sparkle, but improved to 50.8 and easily beat the estimate of 50.1 points. Investors cheered as the indicator climbed to an 8-month high, after posting three successive releases indicating contraction. The Chinese economy has been hit hard by the trade war with the U.S., and a piece of good news was enough to raise the confidence levels of investors.

Markets enter rally mode after China bounces back

U.S retail sales unexpectedly fall

USD/JPY Fundamentals

Sunday (March 31)

  • 19:50 Japanese Tankan Manufacturing Index. Estimate 13. Actual 12
  • 19:50 Japanese Tankan Non-Manufacturing Index. Estimate 22. Actual 21

Monday (April 1)

  • 8:30 US Core Retail Sales. Estimate 0.4%. Actual -0.4%
  • 8:30 US Retail Sales. Estimate 0.3%. Actual -0.2%
  • 9:45 US Final Manufacturing PMI. Estimate 52.5. Actual 52.4
  • 10:00 US ISM Manufacturing PMI. Actual 55.3
  • 10:00 US Business Inventories. Estimate 0.4%. Actual 0.8%
  • 10:00 US Construction Spending. Estimate 0.1%. Actual 1.0%
  • 10:00 US ISM Manufacturing Prices. Actual 54.3
  • 19:50 Japanese Monetary Base. Estimate 4.4%
  • 23:35 Japanese 10-year Bond Auction

Tuesday (April 2)

  • 8:30 US Core Durable Goods Orders.  Estimate 0.3%
  • 8:30 US Durable Goods Orders.  Estimate -1.1%

*All release times are EST

*Key events are in bold

USD/JPY for Monday, April 1, 2019

USD/JPY April 1 at 11:30 DST

Open: 111.02 High: 111.28 Low: 110.80 Close: 111.26

USD/JPY Technical

S3 S2 S1 R1 R2 R3
109.37 110.28 110.90 112.16 112.93 113.70

USD/JPY posted slight gains in the Asian session  and showed little movement in European trade. The pair has edged higher in North American trade

  • 110.90 is a weak support line
  • 112.16 is the next resistance line
  • Current range: 110.90 to 112.16

Further levels in both directions:

  • Below: 110.90, 110.28, 109.37 and 108.11
  • Above: 112.16, 112.93 and 113.70

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.