USD/JPY – Yen improves to 5-week high as Trump talks tough on China

USD/JPY has continued where it left off on Friday, as the pair as lost ground on Monday. In the North American session, the pair is trading at 110.87, down 0.20% on the day. Earlier in the day, the pair touched a low of 110.28, its lowest level since March 28. It’s a quiet start to the week on the fundamentals front. There are no data releases in the U.S. In Japan, Final Manufacturing PMI is expected to improve to 49.5. On Tuesday, the U.S. releases JOLTS Job Openings and the BoJ releases the minutes of its March meeting.

President Trump sent the equity markets sharply lower on Monday, after threatening to raise tariffs on $200 billion worth of Chinese goods as early as Friday, from 10% to 25%. Trump sounded nonchalant about the trade talks, saying that even if an agreement wasn’t reached, the U.S. would benefit from the new tariffs. This has boosted the yen, as nervous investors seek safe-haven assets such as the yen. China has threatened to cancel the talks, so traders should be prepared for some swings in the currency markets in the coming days.

On Friday, the focus was on U.S. employment data in April. The numbers were mixed, as nonfarm payrolls were strong, but wage growth remained soft. Average Hourly Earnings edged up to 0.2%, up from 0.1%. However, this missed the estimate of 0.3%. Nonfarm payrolls sparkled, climbing to 263 thousand, up from 196 thousand a month earlier. The reading easily beat the forecast of 181 thousand. The unemployment rate dipped to 3.6% in April, down from 3.8% a month earlier. This marked the lowest unemployment rate since 1969.

Tariff threat turns risk appetite on its head

Risk slumps after Trump’s Trade Threats

USD/JPY Fundamentals

Monday (May 6)

  • 10:00 US FOMC Member Williams Speaks
  • 20:30 Japanese Final Manufacturing PMI. Estimate 49.5

Tuesday (May 7)

  • 10:00 US JOLTS Job Openings. Estimate 7.35M
  • 19:50 BoJ Monetary Policy Meeting Minutes

*All release times are DST

*Key events are in bold

USD/JPY for Monday, May 6, 2019

USD/JPY May 6 at 10:45 DST

Open: 111.10 High: 111.10 Low: 110.28 Close: 110.87

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.11 109.37 110.28 110.90 112.16 112.93

USD/JPY declined in the Asian session but recovered most of the losses. The pair posted small gains in European trade and is steady in North American trade

  • 110.28 is providing support
  • 110.90 is under pressure in resistance
  • Current range: 110.28 to 110.90

Further levels in both directions:

  • Below: 110.28, 109.37 and 108.11
  • Above: 110.90, 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.