USD/JPY – Yen Surges to Kick off New Year

USD/JPY has posted sharp losses on Monday, as the yen trades at 119.06 at the start of the North American session. In economic news, Japanese Final Manufacturing PMI came in at 52.5 points, close to the forecast. Later in the day, we’ll get a look at the BOJ Monetary Base. In the US, today’s key event is ISM Manufacturing PMI. The markets are expecting a slight improvement, with the estimate standing at 49.1 points.

The Japanese yen has surged in the first trading day of the year, gaining close to 150 points. USD/JPY is currently trading at the 119 line, the first time it’s been this low since October. Investors have snapped up the safe-haven yen following weak Chinese manufacturing data, which has underscored the slowdown affecting the world’s second largest economy. As well, another crisis in the Middle East is brewing, as Saudi Arabia abruptly cut off relations with Iran following the execution of a Saudi cleric which led to the ransacking of the Saudi embassy in Tehran.

The US economy showed strong improvement in 2015, but signs of weakness remain, such as the housing sector. Last week, Pending Home Sales was unexpectedly soft, posting a decline of 0.9%, compared to an estimate of a 0.6% gain. Recent housing indicators have also fallen below expectations. Meanwhile, CB Consumer Confidence sparkled in the December report, as the key indicator jumped to 96.5 points, up sharply from 90.4 points a month earlier. This easily beat the estimate of 93.9 points. This excellent reading followed a solid UoM Consumer Sentiment, which improved to 92.6 points, above the forecast of 92.1 points and marking a 4-month high. Consumer confidence indicators are closely monitored by analysts, as stronger consumer confidence often translates into increased consumer spending, a key driver of economic growth. Strong consumer demand has been an important factor in the strength of the US economy, which led to the historic rate hike by the Federal Reserve in December.

USD/JPY Fundamentals

Monday (Jan. 4)

  • 1:35 Japanese Final Manufacturing PMI. Estimate 52.5 points. Actual 52.6 points
  • 14:45 US Final Manufacturing PMI. Estimate 51.1 points.
  • 15:00 US ISM Manufacturing PMI. Estimate 49.1 points
  • 15:00 US Construction Spending. Estimate 0.7%
  • 15:00 US ISM Manufacturing Prices. Estimate 36.5 points
  • 23:50 Japanese Monetary Base. Estimate 33.2%

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Monday, January 4, 2016

USD/JPY January 4 at 11:25 GMT

USD/JPY 119.06 H: 120.46 L: 118.70

USD/JPY Technical

S3 S2 S1 R1 R2 R3
115.45 116.88 118.53 120.40 121.50 122.40
  • USD/JPY posted sharp losses in the Asian session. The pair has been choppy in European trade.
  • There is resistance at 120.40
  • 118.53 is providing weak support
  • Current range: 118.53 to 120.40

Further levels in both directions:

  • Below: 118.53, 116.88 and 115.45
  • Above: 120.40, 121.50, 122.40, and 123.74

OANDA’s Open Positions Ratio

In the USD/JPY ratio, long positions continue to command a solid majority (66%), which is indicative of strong trader bias towards the pair 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 analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.