By Kenny Fisher
The Japanese yen is firm on Monday, as the pair trades in the low-101 range. On the weekend, BOJ Governor Haruhiko Kuroda said that the central bank's monetary stance had led to economic growth but inflation remained below target. Japanese Flash Manufacturing PMI improved in May, pushing above the 50 line which separates between expansion and contraction. In the US, today's highlight is Existing Home Sales.
Speaking at the International Economic Association in Jordan on Sunday, BOJ Governor Kuroda sounded upbeat about the bank's quantitative and qualitative easing policy, introduced in April 2013. Kuroda noted that growth had improved and deflation curbed, but that inflation was around 1%, well short of the target of 2%. The BOJ had hoped to reach its inflation target by 2015, but Kuroda acknowledged that this goal would take longer, and BOJ would continue its current stance of large-scale monetary easing.
There was positive economic news out of the US on Thursday, as Unemployment Claims dipped to 312,000 last week, beating the estimate of 316,000. As well, the Philly Fed Manufacturing Index, which has been on the upswing for most of 2014, continued the trend and improved to 17.8 points, crushing the estimate of 14.3. This was the index's strongest reading since last August, and points to a manufacturing sector which is expanding in order to keep up with increasing demand.
The Federal Reserve continued to trim its QE program last week, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won't see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as "steady as she goes."
USD/JPY for Monday, June 23, 2014
USD/JPY June 23 at 1200 GMT
USD/JPY 101.84 H: 102.14 L: 101.82
- USD/JPY dropped below the 102 line in the Asian session. The pair has edged lower in European trading.
- On the upside, 102.53 continues to provide resistance. This is followed by resistance at 103.07, which has held firm since early April.
- 101.19 is providing support. The key level of 100 is stronger.
- Current range: 101.19 to 102.53
Further levels in both directions:
- Below: 101.19, 100.00, 99.57 and 98.97
- Above: 102.53, 103.07, 104.17 and 105.70
OANDA's Open Positions Ratio
USD/JPY ratio is pointing to gains in short positions in Monday trading. This is consistent with the movement of the pair, as the yen has posted slight gains. The ratio continues to be made up of a majority of long positions, indicating trader bias toward the dollar reversing directions and moving higher.
- 1:35 Japanese Flash Manufacturing PMI. Actual 51.1 points.
- 6:00 BOJ Governor Haruhiko Kuroda Speaks.
- 13:45 US Flash Manufacturing PMI. Estimate 56.1 points.
- 14:00 US Existing Home Sales. Estimate 4.74M.
*Key releases are highlighted in bold
*All release times are GMT