USD/JPY – Japanese manufacturing data dips, but yen yawns

It continues to be a quiet week for USD/JPY. In Tuesday’s North American session, the pair is trading at 111.14, down 0.06% on the day. On the release front, Japanese BSI Manufacturing Index slipped 7.3 points in the fourth quarter, its steepest decline since 2016. In the U.S., Core CPI edged down to 0.1%, shy of the estimate of 0.2%. CPI remained steady at 0.2%. Later in the day, Japan releases Core Machinery Orders and PPI. On Wednesday, the U.S. publishes PPI and durable goods orders data.

U.S. inflation numbers remain well below the Federal Reserve’s inflation target of 2.0 percent. This has given the Fed plenty of breathing room regarding rate hikes, as policymakers continue to signal that the Fed could hold off until the second half of the year. In a television interview on Sunday, Jerome Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and did not felt any hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar, as a lack of rate hikes makes the greenback less attractive to investors.

The markets are not expecting any changes in monetary policy from the Bank of Japan, which will hold a policy meeting later this week. There is little pressure on policymakers to raise interest rates, especially with the Federal Reserve and ECB putting a freeze on rate hikes for the time being. However, the BoJ is concerned that the Japanese yen could rise if the global economy takes a downturn in 2019, which would weigh on exports and push inflation levels lower. If the yen does move higher, the bank will have to consider additional stimulus in order to keep the currency in check. This means that it’s unlikely that the safe-haven yen will be posting significant gains in the next few months, barring geopolitical turmoil.

Trade trembles and Brexit bumbling start the week

Brexit and sterling volatility expected

USD/JPY Fundamentals

Monday (March 11)

  • 19:50 Japanese BSI Manufacturing Index. Estimate 4.8. Actual -7.3

Tuesday (March 12)

  • 6:00 US NFIB Small Business Index. Estimate 102.0. Actual 101.7
  • 8:30 US CPI. Estimate 0.2%. Actual 0.2%.
  • 8:30 US Core CPI. Estimate 0.2%. Actual 0.1%
  • 8:45 US FOMC Member Brainard Speaks
  • 13:01 US 10-year Bond Auction
  • 19:50 Japanese Core Machinery Orders. Estimate -1.5%
  • 19:50 Japanese PPI. Estimate 0.7%

Wednesday (March 13)

  • 00:30 Japanese Tertiary Industry Activity. Estimate -0.3%
  • 8:30 US Core Durable Goods Orders. Estimate 0.1%
  • 8:30 US Durable Goods Orders. Estimate -0.5%
  • 8:30 US PPI. Estimate 0.2%
  • 8:30 US Core PPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, March 12, 2019

USD/JPY March 12 at 10:50 EST

Open: 111.21 High: 111.47 Low: 111.10 Close: 111.14

USD/JPY Technical

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

USD/JPY posted small gains in the Asian session but then retracted  in European trade. The pair is showing little movement in North American trade

  • 110.90 remains a weak support level
  • 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

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