Seeking Alpha
Currencies, macro, fixed income
Profile| Send Message|
( followers)  

USD/JPY has edged lower in Thursday trading, as the pair trades slightly above the 102 line. In economic news, Japanese Current Account posted a larger deficit than expected. Later in the day, The Bank of Japan releases its Monetary Policy Meeting Minutes. In the US, there are three key releases later today – Core CPI, Unemployment Claims and the Philly Fed Manufacturing Index.

It hasn’t been a very good week for US releases up till now. Building Permits dipped to 0.94 million, its lowest level in five months. The indicator fell short of the estimate of 0.98 million. The Producer Price Index dropped to 0.2%, down from 0.4% a month earlier. Although the index did match the forecast, we continue to see weak inflation numbers, indicative of an underperforming economy. On Tuesday, the culprit was the Empire State Manufacturing Index. The important manufacturing indicator slid to 4.5 points in January, down sharply from 12.5 a month earlier. Meanwhile, the hiccups continue on the employment front, as Unemployment Claims were higher than expected last week. If the markets don’t see some solid numbers on Thursday, the dollar could lose ground.

According to the Federal Reserve minutes, which were released on Wednesday, we’re unlikely to see interest rates rise if unemployment drops to 6.5%. Previously, the Fed had said they would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also show that the Fed will likely continue trimming QE, barring any downturns in the economy.

On Tuesday, the BOJ said that its current monetary policy would continue. The Bank plans to maintain its increase of base money, its key monetary policy gauge, at an annual pace of 60-70 trillion yen. The BOJ added that it was pleased with economic activity, saying that the economy continues to recover at a moderate pace. With a sales tax increase scheduled in April, the Bank is sending the markets a signal that it has no plans to implement additional stimulus in the near future. We could see movement from the yen if the BOJ minutes reveal any surprises.

Japanese Preliminary GDP, which is released on a quarterly basis, started off the week on a disappointing note. The indicator posted a modest gain of 0.3% in Q4, down from 0.5% in the previous reading. This was well short of the estimate of 0.7% and was the lowest reading we've seen since Q1 of 2013. Meanwhile, inflation indicators continue to point upwards, after years of deflation which hobbled the economy. Last week the Corporate Goods Price Index posted a healthy gain of 2.4%, matching the forecast.

USD/JPY for Thursday, February 20, 2014

Forex Rate Graph 21/1/13

USD/JPY February 20 at 13:25 GMT

USD/JPY 102.05 H: 102.41 L: 101.67

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.30 104.17

  • USD/JPY has edged lower on Thursday, trading just above the 102 line.
  • 102.53 is the next resistance line. This is followed by 103.30.
  • 101.19 is providing support. Next is the key level of 100.00, which has remained intact since November.
  • Current range: 101.19 to 102.53

Further levels in both directions:

  • Below: 101.19, 100.00, 99.57 and 98.65
  • Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA's Open Positions Ratio

USD/JPY ratio is almost unchanged in Thursday trading. This is consistent with what we are seeing from the pair, which has not showed much activity. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar posting gains against the yen.

The yen continues to trade close to the 102 level. We could see some movement from the pair in the North American session, as the US releases Unemployment Claims, as well as key inflation and manufacturing numbers.

USD/JPY Fundamentals

  • 13:30 US Core CPI. Estimate 0.1%.
  • 13:30 US Unemployment Claims. Estimate 335K.
  • 13:30 US CPI. Estimate 0.1%.
  • 14:00 US Flash Manufacturing PMI. Estimate 53.6 points.
  • 15:00 Eurozone Consumer Confidence. Estimate -11 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 9.2 points.
  • 15:00 US Flash Mortgage Delinquencies.
  • 15:00 US CB Leading Index. Estimate 0.5%.
  • 15:30 US Natural Gas Storage. Estimate -255B.
  • 16:00 US Crude Oil Inventories. Estimate 2.1M.
  • 23:50 Bank of Japan Monetary Policy Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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.

Source: USD/JPY - Little Movement Ahead Of Unemployment Claims