USD/JPY – Yen Close to 2-week Low as BoJ Says Ultra-Easing to Continue

USD/JPY has pushed higher in the Monday session, as the pair trades at 111.30 in the North American session. On the release front, Japan’s trade surplus improved to 0.13 trillion, but this was well short of the estimate of JPY 0.35 trillion. In the US, the only releases are speeches from FOMC members Dudley and Evans. On Tuesday, the BoJ will release the minutes of the April policy meeting.

The Bank of Japan sounded upbeat on the economy in its rate statement on Friday, but the positive spin didn’t seem to impress the markets, as USD/JPY lost ground. The BoJ indicated that it had no plans to reduce its ultra-accommodative monetary policy, which includes negative (short term) interest rates and an asset-purchase program of JPY 80 billion/year. The rate statement took note of the stronger Japanese economy, stating that private consumption was showing “increased resilience”. This was more hawkish than the April statement, when the bank said that private consumption was “resilient”.  The economy has shown improvement in 2017, as stronger global demand has boosted the Japanese manufacturing and export sectors. At the same time, inflation remains stubbornly low, well below the bank’s target of 2.0 percent. At a press conference, BoJ Governor Haruhiko Kuroda would not say when the bank might exit its current monetary policy. There have been calls for the bank to lower its inflation goal, but Kuroda said that the ultra-loose policy would continue until the 2% target is achieved.

The US wrapped up the week on a sour note, as construction and consumer confidence reports missed expectations. Building Permits dropped to 1.17 million, its lowest level since August 2016. Housing Starts were also week, as the reading of 1.09 million marked the lowest since November 2016. There is concern that the soft construction numbers could weigh on second-quarter growth. There was more bad news from UoM Consumer Sentiment, which dipped to 94.7 in May, marking a 7-month low. This is significant, as it is the indicator’s lowest reading since President Trump took office, and points to consumer unease with how the US economy is being handled. There are troubling signs that the June UoM report could be even lower, coming after the Comey testimony which has damaged Trump’s credibility even further.

Fed Dudley: Confident Inflation Should Rebound with Wages

USD/JPY Fundamentals

Sunday (June 18)

  • 19:50 Japanese Trade Balance. Estimate 0.35T. Actual 0.13T

Monday (June 19)

  • 8:00 US FOMC Member William Dudley Speaks
  • 19:00 US FOMC Member Charles Evans Speaks

Tuesday (June 20)

  • 19:50 BoJ Monetary Policy Meeting Minutes

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, June 19, 2017

USD/JPY June 19 at 10:30 EDT

Open: 110.89 High: 111.39 Low: 110.76 Close: 111.34

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.13 109.77 110.94 112.57 113.55 114.37

USD/JPY ticked higher in the Asian session and was flat in the European session. The pair has posted slight gains in North American trade

  • 110.94 has switched to a support role following gains by USD/JPY. It is a weak line
  • 112.57 is the next resistance line
  • Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 109.77, 108.13 and 106.68
  •  Above: 112.57, 113.55 and 114.37

OANDA’s Open Positions Ratio

In the Monday session, USD/JPY ratio is  showing long positions with a majority (65%), indicative of trader bias towards USD/JPY moving to higher levels.

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.