USD/JPY - Yen Lower As Ukraine Tensions Continues

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Includes: FXY, JYN, YCL, YCS
by: Dean Popplewell

By Kenny Fisher

The Japanese yen has lost some ground against the US dollar, as the pair trades in the high-101 range in Monday trading. The crisis in the Ukraine continues to dominate the news, and has dampened market sentiment. In the US, today’s highlight is Empire State Manufacturing Index. There are no Japanese releases on Monday.

It’s being described as the worst crisis on the European continent since the end of the Cold War. On Sunday, Crimea, a southern region of the Ukraine, voted overwhelmingly to leave the Ukraine and join Russia. The results brought joy to most residents of Crimea, who are of Russian ethnicity. However, the vote has been sharply denounced by the EU and the US as illegal, and both have warned Russia against annexing the region. Western nations are expected to impose stiff sanctions if Russia does not step back and respect Ukrainian sovereignty, but Moscow has not given any indication of doing so. The standoff is likely to get worse, and the turmoil could well affect the markets this week.

No news was good news as far as the yen was concerned, as last week’s BOJ minutes contained no surprises. The central bank said that the economy and inflation is in line with the forecasts, and the April sales tax hike should not hurt economic growth. The Abe government is implementing the tax hike in a bid to tackle Japan’s massive national debt, and there are concerns that consumer spending could suffer, which could dampen the current recovery.

In the US, concerns about the job market eased after a solid Unemployment Claims release on Thursday. The key indicator dropped to 315 thousand, down from 323 thousand the previous week. This beat the estimate of 334 thousand and marked a three-month low. Core Retail Sales and Retail Sales both posted gains of 0.3%, which were within market expectations. These indicators are the primary gauges of consumer spending, and although the gains were modest, they mark an improvement over the January readings.

USD/JPY for Monday, March 17, 2014

Forex Rate Graph 21/1/13

USD/JPY March 17 at 11:50 GMT

USD/JPY 101.81 H: 101.87 L: 101.34

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.30 104.17
Click to enlarge
  • 102.53 continues in a resistance role. This is followed by a resistance line at 103.30.
  • 101.19 is providing support. The next support line is the key level of 100.00, which has held firm since last 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 pointing to gains in long positions on Monday, continuing the trend we saw for most of last week. This is consistent with the pair’s current movement, as the dollar has gained ground. Long positions make up a majority of the open positions in the ratio, indicating trader bias towards the dollar continuing to move higher.

The pair is trading quietly near the 102 level. We are not seeing much movement in the European session.

USD/JPY Fundamentals

  • 12:30 US Empire State Manufacturing Index. Estimate 6.6 points.
  • 13:00 US TIC Long-Term Purchases. Estimate 23.4B.
  • 13:15 US Capacity Utilization Rate. Estimate 78.7%.
  • 13:15 US Industrial Production. Estimate 0.2%.
  • 14:00 US NAHB Housing Market. Estimate 50 points.

*Key releases are highlighted in bold

*All release times are GMT