USD/JPY – Japanese yen gains ground, investors eye FOMC rate statement

USD/JPY continues to lose ground this week. In Wednesday’s North American session, the pair is trading at 111.16, down 0.24% on the day. On the release front, there are no Japanese events this week, so U.S. indicators will have a magnified effect on the direction of the pair. In the U.S., it was a mixed day. ADP nonfarm payrolls soared to 275 thousand, crushing the estimate of 181 thousand. Will the official nonfarm payrolls follow suit on Friday? ISM Manufacturing PMI slowed to 52.8, shy of the estimate of 55.0 points. Later, the FOMC will set the monthly benchmark rate and release a rate statement. On Thursday, the U.S. posts unemployment claims.

After an aggressive stance in 2018, the Federal Reserve has become dovish, reflecting a slower U.S. economy. The Fed is projected to stay on the sidelines and maintain rates at a range between 2.25-2.50 percent. The Fed hasn’t raised rates since December and has signaled that it could freeze rates until next year. The most recent inflation numbers will reinforce that stance, as the Fed target of 2.0% remains elusive. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. GDP and consumer spending are looking bright, but nonetheless there is no danger of the economy overheating, so the Fed can afford to leave rates at the current level for the near future.

fomc-guide-low-inflation-may-allow-fed-tee-rate-cut

Will the U.S dollar get the Fed’s help?

Wednesday (May 1)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 181K. Actual 275K
  • 9:45 US Final Manufacturing PMI. Estimate 52.4. Actual 52.6
  • 10:00 US ISM Manufacturing PMI. Estimate 55.0. Actual 52.8
  • 10:00 US Construction Spending. Estimate 0.3%. Actual -0.9%
  • 10:00 US ISM Manufacturing Prices. Estimate 54.5. Actual 50.0
  • 10:30 US Crude Oil Inventories. Estimate 1.3M. Actual 1.9M
  • All Day – US Total Vehicle Sales. Estimate 17.1M
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.50%
  • 14:30 FOMC Press Conference

Thursday (May 2)

  • 8:30 US Unemployment Claims. Estimate 220K
  • Tentative – US Treasury Currency Report

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, May 1, 2019

USD/JPY May 1 at 11:25 DST

Open: 111.43 High: 111.55 Low: 111.13 Close: 111.16

USD/JPY Technical

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

USD/JPY was flat in the Asian session. The pair posted slight gains in European trade and is steady in North American trade

  • 110.90 is providing weak support
  • 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.