USD/JPY – Dollar Improves to 109 Yen, Japanese Trade Balance Next

USD/JPY has posted modest gains in the Wednesday session. In North American trade, the dollar is trading at 109 yen. In economic news, there are no major US events on the schedule. In Japan, the trade surplus is expected to dip to JPY 0.61 trillion. On Thursday, the US releases the Philly Fed Manufacturing Index and unemployment claims. As well, US Treasury Secretary Steven Mnuchin will speak at event in Washington.

US vice-president Pence is in Tokyo for talks with Japanese officials. High on the agenda are bilateral trade relations as well as the simmering crisis in North Korea. On the trade front, the US administration is pushing for a free trade agreement with Japan, after President Trump pulled the US out of the Trans-Pacific Partnership, a regional free-trade agreement which was strongly supported by Japan. Trump has complained about the large trade deficit that the US has with Japan, and has criticized Japan for manipulating its currency for trade purposes. Trump wants the US to have greater access to Japanese markets and is looking for Japanese investment to help fund his infrastructure program. North Korea has been a flash-point in recent weeks causing volatility in the markets as the war of words between the US and North Korea has escalated, with North Korea warning it will respond with a nuclear strike if attacked by the US. The crisis has been bullish for the safe-haven Japanese currency, which has climbed 1.9% in April.

The Federal Reserve has broadly hinted that it plans two more rate hikes in 2017. There have been calls from some Fed policymakers to raise rates three more times, but this seems unlikely, given disappointing retail sales and CPI numbers in March. These weak numbers are likely to make the Fed more dovish, and prompted the Atlanta and New York Federal Reserve banks to lower their outlook for US economic growth for the first quarter of 2017. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but this has not translated into stronger consumer spending, a key driver of economic growth. What can we expect next from the Fed? The likelihood of a rate hike in June are are currently priced at 45%, according to the CME Group. The odds were as high as 65% just a few weeks ago, indicative of growing doubts that the Fed will make a move at the June policy meeting.

USD/JPY Fundamentals

Wednesday (April 19)

  • 10:30 US Crude Oil Inventories. Estimate -1.0M
  • 14:00 US Beige Book
  • 19:50 Japanese Trade Balance. Estimate 0.61T

Thursday (April 20)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 25.6
  • 8:30 US Unemployment Claims. Estimate 241K
  • 13:15 US Treasury Secretary Steven Mnuchin Speech

*All release times are EST

*Key events are in bold

USD/JPY for Wednesday, April 19, 2017

USD/JPY April 19 at 9:55 EST

Open: 108.54 High: 109.08 Low: 108.40 Close: 109.03

USD/JPY Technical

S3 S2 S1 R1 R2 R3
106.14 107.49 108.54 109.77 110.94 112.57

USD/JPY recorded slight gains in the Asian and European sessions. The pair is steady in North American trade

  • 108.54 is providing support
  • 109.77 is the next line of resistance
  • Current range: 108.54 to 109.77

Further levels in both directions:

  • Below: 108.54, 107.49 and 106.14
  •  Above: 109.77, 110.94, 112.57 and 113.80

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Wednesday session. Currently, long positions have a majority (64%), indicative of trader bias towards USD/JPY continuing to move higher.

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.