USD/JPY – Japanese yen yawns as U.S retail sales disappoint

USD/JPY is almost unchanged on Wednesday. In the North American session, the pair is trading at 109.57, down 0.03% on the day. There are no major Japanese events. In the U.S., retail sales and core retail sales both missed expectations. On Thursday, the U.S. releases three key indicators – building permits, unemployment claims and the Philly Fed Manufacturing Index.

U.S. retail sales in April were weaker than forecast, but the yen didn’t take advantage. Retail sales declined 0.2%, after a strong gain of 1.6% in March. Core retail sales posted a small gain of 0.1%, much lower than the estimate of 0.7%.

Another round of tariffs between the U.S. and China has triggered sharp swings in the equity markets. This has also led to significant volatility from USD/JPY, as the safe-haven yen has climbed when risk appetite has sagged, and conversely, the yen has fallen when trade tensions have eased and risk apprehension has declined. The yen has posted four straight winning weeks, corresponding to sharp declines on global equity markets. The new tariffs are set to take effect in several weeks and could continue to cause volatility in the stock markets. If this happens, traders can also expect swings in the movement of USD/JPY.

In the latest bout between the two super-economies, the U.S. slapped tariffs on $200 billion in Chinese products, and China responded with counter-tariffs on $60 billion in U.S. products. Despite the tariff tussle, talks continue between the U.S. and China, with the next round of negotiations scheduled for Beijing. The tariffs have made huge headlines, but do not take effect for several weeks.

Dollar Stuck in a Contained Vortex

USD/JPY Fundamentals

Wednesday (May 15)

  • 2:00 Japanese Preliminary Machine Tool Orders. Actual -33%
  • 8:30 US Core Retail Sales. Estimate 0.7%. Actual 0.1%
  • 8:30 US Retail Sales. Estimate 0.2%. Actual -0.2%
  • 8:30 US Empire State Manufacturing Index. Estimate 8.2. Actual 17.8
  • 9:15 US Capacity Utilization Rate. Estimate 78.7%. Actual 77.9%
  • 9:15 US Industrial Production. Estimate 0.0%. Actual 0.5%
  • 9:30 US FOMC Member Quarles Speaks
  • 10:00 US Business Inventories. Estimate 0.0%. Actual 0.0%
  • 10:00 US NAHB Housing Market Index. Estimate 64. Actual 66
  • 10:30 US Crude Oil Inventories. Estimate 0.0M. Actual
  • 16:00 US TIC Long-Term Purchases. Estimate 36.3B
  • 19:50 Japanese PPI. Estimate 1.1%

Thursday (May 16)

  • 8:30 US Building Permits. Estimate 1.29M
  • 8:30 US Unemployment Claims. Estimate 220K
  • 8:30 US Philly Fed Manufacturing Index. Estimate 10.0
  • 8:30 US Housing Starts. Estimate 1.21M

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, May 15, 2019

USD/JPY May 15 at 11:50 DST

Open: 109.61 High: 109.70 Low: 109.15 Close: 109.57

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.10 108.70 109.35 110.40 111.15 112.40

USD/JPY showed limited movement in Asian trade. The pair posted losses in the European session but has reversed directions in North American trade

  • 109.35 was tested earlier in support. It is a weak line
  • 110.40 is the next resistance line
  • Current range: 109.35 to 110.40

Further levels in both directions:

  • Below: 109.35, 108.70, 108.10 and 107.50
  • Above: 110.40, 111.15 and 112.40

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.