USD/JPY – Yen Edges Lower, Investors Eye Japanese CPI Report

USD/JPY has posted losses in the Thursday session, after strong gains on Wednesday. In the North American session, USD/JPY is trading at 106.33, down 0.49% on the day. On the release front, US unemployment claims sparkled, dropping to 215 thousand. This easily beat the estimate of 230 thousand. Later in the day, the US publishes UoM Consumer Sentiment, which is expected to climb to 101.9 points. In Japan, Tokyo Core CPI is expected to remain unchanged at 0.9%, and Preliminary Industrial Production is forecast to rebound with a gain of 5.1%.

The US economy continues to expand at a brisk clip. Revised GDP for the third quarter came in at 2.9%, beating the estimate of 2.7%. This reading was revised upwards from the initial GDP estimate of 2.5%. Although fourth quarter growth was solid, it could not keep up with a superb third quarter, which posted a gain of 3.2%. As for 2018, first quarter growth is expected to soften to 1.8%, but there is still a strong chance that the economy could hit 3% growth this year, as promised by US President Trump. The catalysts for such a rosy prediction are the massive tax cut and higher government spending. Where does this leave the Federal Reserve, which raised interest rates last week? Currently, the Fed is projecting to more rate hikes this year, but if the economy remains strong and inflation levels move closer to the Fed target of 2%, we could see four rate increases in 2018.

Much like the situation in the eurozone, Japan’s economy continues to expand, but underlying inflation remains at low levels. Inflation is currently around 1%, well below the Bank of Japan target of just below 2 percent. The BoJ has been consistent in its message to the markets, saying that it has no plans to tighten its ultra-accommodative monetary policy until inflation moves closer to target. With the rebound in the Japanese economy, there has been speculation that the BoJ could tighten its policy, which would likely trigger volatility from the yen.

USD/JPY Fundamentals

 Thursday (March 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 1.6%
  • 8:30 US Personal Spending. Estimate 0.2%. Actual 0.2%
  • 8:30 US Unemployment Claims. Estimate 230K. Actual 215K
  • 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
  • 9:45 US Chicago PMI. Estimate 62.1
  • 10:00 US Revised UoM Consumer Sentiment. Estimate 101.9
  • 10:00 US Revised UoM Inflation Expectations
  • 10:30 US Natural Gas Storage. Estimate -75B
  • 19:30 Japanese Tokyo Core CPI. Estimate 0.9%
  • 19:50 Japanese Preliminary Industrial Production. Estimate 5.1%

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, March 29, 2018

USD/JPY March 29 at 10:00 EST

Open: 106.85 High: 106.93 Low: 106.32 Close: 106.33

USD/JPY Technical

S3 S2 S1 R1 R2 R3
103.09 104.32 105.53 106.64 107.29 108.00

USD/JPY edged lower in the Asian session. The pair was flat in European trade and has ticked lower in North American trade

  • 105.53 is providing support
  • 106.64 has switched to a resistance role after gains by USD/JPY on Thursday

Further levels in both directions:

  • Below: 105.53, 104.32, 103.09 and 101.84
  • Above: 106.64, 107.29 and 108.00
  • Current range: 105.53 to 106.64

OANDA’s Open Positions Ratios

USD/JPY ratio continues to show little movement this week. Currently, long positions have a majority (68%), indicative of trader bias towards USD/JPY reversing directions and head to higher ground.

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.