USD/JPY – Japanese Yen Inches Lower as Investors Look for Cues

The Japanese yen is steady in the Tuesday session. In the North American session, USD/JPY is trading at 112.36, up 0.16% on the day. On the release front, there are no Japanese events on the schedule. In the US, Import Prices gained 0.7%, above the forecast of 0.6%. On Wednesday, the focus will be on US housing data, with the release of Housing Starts and Building Permits.

On the weekend, Bank of Japan Governor Haruhiko Kuroda reiterated that the BoJ remains firmly committed to its ultra-easing monetary policy. Kuroda spoke at a Group of 30 meeting in Washington, stating that monetary policy would remain in place until inflation levels moved higher. Kuroda acknowledged that the BOJ’s inflation target of 2 percent was unlikely to be reached anytime soon, but he expected rising labor costs to push inflation levels higher. BoJ policymakers have echoed Kuroda’s sentiment that inflation levels will move higher, but the data does not appear to support this optimism, and the BoJ has been forced to lower its inflation forecast six times since 2013, when it began its huge stimulus program. With the BoJ forecasting that inflation will not reach 2 percent until fiscal year 2020, it’s a safe bet that the bank’s accommodative policy will not be tightened any time soon.

With the Federal Reserve dropping strong hints that it will raise rates in December, the odds of a December hike are currently at a sizzling 91 percent. Just one month ago, the odds were 50-50 that the Fed would raise rates at the December meeting. Low inflation levels have been a key reason that the Fed has been reluctant to raise rates, but Fed Chair Janet Yellen and other policymakers have expressed optimism that inflation will move closer towards the Fed’s inflation target of 2 percent. The markets will be looking for some clues as FOMC member Patrick Harker speaks on Tuesday, followed by speeches from FOMC members William Dudley and Robert Kaplan on Wednesday.

USD/JPY Fundamentals

Tuesday (October 17)

  • 8:30 US Import Prices. Estimate 0.6%. Actual 0.7%
  • 9:15 US Capacity Utilization Rate. Estimate 76.2%. Actual 76.0%
  • 9:15 US Industrial Production. Estimate 0.3%. Actual 0.3%
  • 10:00 US NAHB Housing Market Index. Estimate 64
  • 13:00 US FOMC Member Patrick Harker Speaks
  • Tentative – US Federal Budget Balance. Estimate -0.9B
  • 16:00 US TIC Long-Term Purchases. Estimate 14.3B

Wednesday (October 18)

  • 8:00 US FOMC Member William Dudley Speaks
  • 8:00 US FOMC Robert Kaplan Speaks
  • 8:30 US Building Permits. Estimate 1.25M
  • 8:30 US Housing Starts. Estimate 1.18M
  • 10:30 US Crude Oil Inventories. Estimate -4.7M
  • 14:00 US Beige Book

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, October 17, 2017

USD/JPY October 17 at 9:55 EDT

Open: 112.18 High: 112.46 Low: 112.04 Close: 112.36

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.69 110.10 110.94 112.57 113.55 114.49

In the Asian session, USD/JPY ticked higher but then retracted. The pair showed little movement in the European session and has edged higher in North American trade

  • 110.94 is providing support
  • 112.57 is under pressure in resistance. It could be tested in the North American session

Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 110.10 and 108.69
  • Above: 112.57, 113.55, 114.49 and 115.50

OANDA’s Open Positions Ratios

USD/JPY ratio is showing slight movement towards short positions. Currently, short positions have a slender majority (52%), indicative of trader bias towards USD/JPY reversing directions and moving lower.

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.