USD/JPY – Yen Ticks Lower on Mixed Japanese Consumer Reports

The Japanese yen continues to have an uneventful week. In Tuesday’s North American session, USD/JPY is trading at 108.91, down 0.04% on the day. On the release front, Japanese consumer indicators were a mixed bag. Household Spending disappointed with a decline of 0.1%, well off the estimate of 1.6%. There was better news from Retail Sales, which jumped 3.6%, beating the estimate of 2.1%. This marked the strongest gain since May 2015. On the inflation front, BoJ Core CPI rose 0.7%, its highest level since July 2015. Later in the day, Japan releases Preliminary Industrial Production, which is expected to post a strong gain of 1.5%. In the US, CB Consumer Confidence rose to 125.4, above the estimate of 123.2 points. Later on Tuesday, President Trump will deliver his State of the Union address before Congress. On Wednesday, there are a host of key indicators in the US, led by ADP Nonfarm Employment Change. The Federal Reserve will release a monetary policy statement, with the markets expecting the benchmark rate to remain unchanged at a range between 1.25%-1.50%.

The Federal Reserve will be in the spotlight on Wednesday. The markets will be keeping a close eye on the rate statement, the final one under Janet Yellen’s tenure. It’s a virtual certainty that the Fed will leaves rates unchanged this time around, although it’s likely that the Fed will raise rates by a quarter-point at the March meeting. Yellen will make way for Jerome Powell, who takes over as chair in early February. Powell is expected to hold the course on monetary policy, which was marked by small, incremental interest rates in order to keep the US economy from overheating.

The yen has looked sharp in recent weeks, having gained 3.2% in January. Last week, a sell-off of the US dollar pushed the currency below the 109 level for the first time since September 2017. On Wednesday, US Treasury Secretary Steven Mnuchin put more pressure on the dollar when he stated that the US had no problem with a weak dollar. Mnuchin has since backtracked, saying that his words were taken out of context and that the US has a long-term interest in a strong dollar. President Trump added that Mnuchin was misinterpreted, but the yen has held its own against the struggling greenback.

USD/JPY Fundamentals

Monday (January 29)

  • 18:30 Japanese Household Spending. Estimate +1.6%. Above -0.1%
  • 18:30 Japanese Unemployment Rate. Estimate 2.7%. Above 2.8%
  • 18:50 Japanese Retail Sales. Estimate 2.1%. Above 3.6%

Tuesday (January 30)

  • 00:00 BoJ Core CPI. Estimate 0.5%. Actual 0.7%
  • 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%. Actual 6.4%
  • 10:00 US CB Consumer Confidence. Estimate 123.2. Actual 125.4
  • 18:50 BoJ Summary of Opinions
  • 18:50 Japanese Preliminary Industrial Production. Estimate 1.5%
  • 21:00 President Trump Speaks

Wednesday (January 31)

  • 8:15 US ADP Nonfarm Employment Change. Estimate 191K
  • 8:30 US Employment Cost Index. Estimate 0.5%
  • 9:45 US Chicago PMI. Estimate 64.3
  • 10:00 US Pending Home Sales. Estimate 0.5%
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <1.50%

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, January 30, 2018

USD/JPY January 30 at 11:45 EDT

Open: 108.96 High: 109.21 Low: 108.41 Close: 108.91

USD/JPY Technical

S3 S2 S1 R1 R2 R3
106.14 107.29 108.21 109.11 110.10 111.53

USD/JPY edged lower in the Asian session. After posting small losses in European trade, the pair has reversed  directions and posted gains in the North American session

  • 108.21 is providing support
  • 109.11 was tested earlier in resistance and is a weak line. It could see further activity in the North American session

Current range: 108.21 to 109.11

Further levels in both directions:

  • Below: 108.21, 107.29 and 106.14
  • Above: 109.11, 110.10, 111.53 and 112.57

OANDA’s Open Positions Ratios

USD/JPY is showing slight movement towards short positions. Currently, long positions have a majority (66%), indicative of trader bias towards USD/JPY reversing directions and moving 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.