Japanese yen steady in thin trade

The Japanese yen has posted slight gains in the Thursday session. Currently, USD/JPY is trading at 104.67, down 0.17% on the day. With US markets closed for the Thanksgiving holiday and Friday an unofficial holiday, we can expect calm waters for USD/JPY for the remainder of the week.

Japan’s inflation indicators have been in focus throughout the week. The Services Producer Price Index (SPPI) came in at -0.6% in October, after a strong gain of 1.3% in September. Admittedly, Japan has suffered from chronically low inflation levels, but SPPI had not recorded a decline since May 2013. This was followed by BoJ Core CPI, which is the Bank of Japan’s preferred inflation gauge. The index has hovered close to the zero level for most of 2020. Later on Thursday, we’ll get a look at another important inflation indicator, Tokyo Core CPI (23:30 GMT). The index has reeled off three straight declines, and no relief is expected for November, with a forecast of -0.6%.

This prolonged lack of inflation is reflective of weak economic conditions, as consumers aren’t spending and exports are down due to lower global demand for Japanese products. The Bank of Japan is not expected to alter its ultra-accommodative monetary policy in the near future. The central bank purchases government bonds worth trillions of yen each year, but this has failed to raise inflation anywhere near the bank’s inflation target of around 2 percent.

Japan’s economy continues to limp along, but this hasn’t prevented the yen from making substantial inroads against the US dollar. Earlier in November, USD/JPY dropped to a monthly low of 103.17, as the yen pushed the greenback to its lowest level since the first week of March.

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USD/JPY Technical Analysis

  • There is resistance at 104.76. This is followed by resistance at 105.69
  • 103.28 is the first line of support. Below, there is support at 102.73
  • The 20-day MA line remains relevant. Currently, it is situated just above the pair

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.