USD/JPY – Japanese yen edges higher on positive Japanese data

USD/JPY has posted slight losses on Wednesday. In the North American session, the pair is trading at 110.29, down 0.18% on the day. In economic news, Japan released strong numbers. Core Machinery Orders climbed 3.8%, crushing the estimate of o.0%. This marked a 5-month high. Japan’s trade deficit narrowed to JPY 11.0 trillion, beating the estimate of JPY 12.0 trillion. In the U.S. today’s highlight is the minutes of the Federal Reserve’s policy meeting earlier this month. On Thursday, the U.S. releases unemployment claims.

Investors are keeping a close eye on the Federal Reserve meeting. Will the minutes point to any bias regarding the next rate move? At the May meeting, the Federal Reserve maintained the benchmark rate for a fourth straight month. The rate statement noted that inflation pressures remain muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance after the meeting, saying that “we don’t see a strong case for moving in either direction”. The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.

Trade tensions between the U.S. and China have escalated in recent weeks, causing strong volatility on global equity markets. This has also affected the movement of the Japanese yen, which is a safe-haven asset. It has been a tale of two Mays for the Japanese currency. The yen posted strong gains in the first half of the month, but has reversed directions and given up much of those gains. With the equity markets continuing to show strong swings and risk appetite unsteady, traders should be prepared for more volatility from USD/JPY.

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USD/JPY Fundamentals

Tuesday (May 21)

  • 19:50 Japanese Core Machinery Orders. Estimate 0.0%. Actual 3.8%
  • 19:50 Japanese Trade Balance. Estimate -0.12T. Actual -0.11T

Wednesday (May 22)

  • 1:00 US FOMC Member Bullard Speaks
  • 10:00 US FOMC Member Williams Speaks
  • 10:30 US Crude Oil Inventories. Estimate -1.2M. Actual 4.7M
  • 14:00 US FOMC Meeting Minutes
  • 20:30 Japanese Flash Manufacturing PMI. Estimate 50.5

Thursday (May 23)

  • 8:30 US Unemployment Claims. Estimate 215K

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, May 22, 2019

USD/JPY May 22 at 11:45 DST

Open: 110.49 High: 110.63 Low: 110.29 Close: 110.29

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 ticked lower in the European session and is flat in North American trade

  • 109.35 is providing support
  • 110.40 is fluid. Currently, it is a weak 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.