USD/JPY – Japanese yen drops to 1-week low, BoJ rate statement looms

The Japanese yen has posted considerable losses in the Tuesday session, continuing the trend seen on Monday. In North American trade, USD/JPY is trading at 112.80, up 0.38% on the day. On the release front, the BoJ winds up its policy meeting and will release a policy statement. As well, Japan will release Preliminary Industrial Production, with an estimate of -0.2%. In the U.S, CB consumer confidence dipped to 137.9, but still beat the forecast of 136.3 points.

All eyes are on the Bank of Japan, but investors and analysts have learned to watch out for tweaks to monetary policy rather than any substantive moves. This could include minor changes to the way that the BoJ times its bond purchases, or other tweaks which will not cause significant volatility in exchange rates. The bank is expected to maintain interest rates at -0.10% and continue its massive stimulus program, which has had limited success in boosting inflation. The BoJ’s inflation target of around 2% could take years to achieve, but policymakers have no plans to lower the target.

Japanese retail sales in September posted a solid gain of 2.1%, matching the estimate. This was the 11th straight gain in retail sales, pointing to strong consumer spending, a key driver of economic growth. The Japanese Ministry of Economy, Trade and Industry (METI) noted that high costs for food and energy boosted retail sales. METI upgraded its assessment, saying that retail sales were improving “gradually”. At the same time, the export-reliant Japanese economy is very vulnerable to the fall-out from the global trade war, and the threat by President Trump to impose tariffs on all Chinese goods could spell more headwinds for the Japanese yen.

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USD/JPY Fundamentals

Tuesday (October 30)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.0%. Actual 5.5%
  • 10:00 US CB Consumer Confidence. Estimate 136.3. Actual 137.9
  • 19:50 Japanese Preliminary Industrial Production. Estimate -0.2%
  • Tentative – BoJ Monetary Policy Statement
  • Tentative – BoJ Monetary Policy Rate. Estimate -0.10%
  • Tentative – BoJ Monetary Outlook Report

Wednesday (October 31)

  • Tentative – BoJ Press Conference
  • 8:15 US ADP Nonfarm Employment Change. Estimate 190K

*All release times are DST

*Key events are in bold

USD/JPY for Tuesday, October 30, 2018

USD/JPY October 30 at 11:35 DST

Open: 112.38 High: 112.98 Low: 112.31 Close: 112.80

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.28 111.20 112.30 113.75 114.73 115.50

USD/JPY edged higher in the Asian session and posted stronger gains in European trade. The pair has recorded small losses in the North American session

  • 112.30 weakened in support but has recovered
  • 113.75 is the next line of resistance
  • Current range: 112.30 to 113.75

Further levels in both directions:

  • Below: 112.30, 111.20, 110.28 and 109.32
  • Above: 113.75, 114.73 and 115.50

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.