USD/JPY – Dollar Punches Above 110 Yen, Shrugs off Soft U.S Retail Sales

The Japanese yen has posted considerable losses in the Tuesday session, USD/JPY is trading at 110.29, up 0.58% on the day. On the release front, Japanese Tertiary Industry Activity declined 0.3%, missing the estimate of -0.2%. This marked the third decline in four months. In the US, the focus is on consumer spending reports. Retail Sales dipped to 0.3%, shy of the estimate of 0.4%. Core Retail Sales edged up to 0.3%, but missed the forecast of 0.5%. On Wednesday, the US will release Housing Starts and Building Permits.

In the U.S, Retail sales reports were shy of the estimates in April, but investors preferred to focus on the positive, noting that both retail sales and core retail sales posted gains, as consumer spending is improving after a sluggish first quarter. A new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.

Has the impressive streak come to an end? Japan has boasted eight consecutive quarters of economic growth, but the first quarter appears likely to buck the trend. The economy is expected to show no growth in Q1, compared to strong growth of 1.6% in the fourth quarter. The expected slowdown is being attributed to weak consumer spending and softer global demand for Japanese exports. Still, analysts are viewing the Q1 report card as a temporary blip, with second-quarter expected to rebound with annualized growth of 1.0%.

Yields in focus, again

Rate Differentials and Trade Fears Handcuff Capital Markets

USD/JPY Fundamentals

Tuesday (May 15)

  • 00:30 Japanese Tertiary Industry Activity. Estimate -0.2%. Actual -0.3%
  • 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.3%
  • 8:30 US Retail Sales. Estimate 0.4%. Actual 0.3%
  • 8:30 US Empire State Manufacturing Index. Estimate 15.1. Actual 20.1
  • 10:00 US Business Inventories. Estimate 0.2%
  • 10:00 US NAHB Housing Market Index. Estimate 70
  • 12:45 US FOMC Member John Williams Speaks
  • 16:00 US TIC Long-Term Purchases
  • 19:50 Japanese Preliminary GDP. Estimate 0.0%
  • 19:50 Japanese Preliminary GDP Price Index. Estimate 0.3%

Wednesday (May 16)

  • 8:30 US Building Permits. Estimate 1.35M
  • 8:30 US Housing Starts. Estimate 1.33M

*All release times are DST

*Key events are in bold

USD/JPY for Tuesday, May 15, 2018

USD/JPY May 15 at 10:15 DST

Open: 109.65 High: 110.36 Low: 109.65 Close: 110.29

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.00 108.89 110.11 111.22 112.06 113.39

USD/JPY edged higher in the Asian and European sessions. The pair continues to post gains in North American trade

  • 110.11 is a weak support line
  • 111.22 is the next resistance line

Further levels in both directions:

  • Below: 110.11, 108.89, 108.00 and 107.29
  • Above: 111.22, 112.06 and 113.39
  • Current range: 110.11 to 112.22

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Tuesday session. Currently, long positions have a majority (58%), 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.