USD/JPY: Dollar Firm Ahead Of Fed Minutes

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 |  Includes: FXY, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

USD/JPY has posted slight gains on Wednesday, as the pair trades in the high-101 range late in the North American session. Today's highlight is the release of the US FOMC minutes. In Japan, Preliminary Machine Tool Orders improved in the June reading. Later in the day, Japan releases further manufacturing data, with the release of Core Machinery Orders and Tertiary Industry Activity.

The Federal Reserve returns to the spotlight on Wednesday, as the FOMC releases the minutes of its June policy meeting. The markets would love some clarity as to when the Fed is looking to raise interest rates, so any hints in this regard could send the currency markets scrambling. Based on updated Fed forecasts for inflation and unemployment, it's safe to say that the Fed is cautiously optimistic about the pace of the US recovery.

US employment numbers continue to look sharp. On Tuesday, JOLTS Job Openings jumped to 4.64 million, easily beating the estimate of 4.53 million. This follows excellent figures from Nonfarm Payrolls and Unemployment Rate. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers will be under the market microscope.

USD/JPY for Wednesday, July 9, 2014

USD/JPY July 9 at 14:20 GMT

USD/JPY 101.72 H: 101.73 L: 101.45

USD/JPY Technical

S3 S2 S1 R1 R2 R3
99.57 100.00 101.19 102.53 103.07 104.17
Click to enlarge
  • 102.53 is the next line of resistance. 103.07 is stronger.
  • 101.19 is providing support. The next support level is the round number of 100, which has held firm since November.
  • 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 long positions, continuing the trend which has characterized the pair throughout the week. This is consistent with the movement we're seeing from the pair, as the dollar has made slight gains. The ratio is made up of a large majority of long positions, indicating strong trader bias towards the dollar continuing to move higher.

USD/JPY Fundamentals

  • 5:00 Japanese Preliminary Machine Tool Orders. Actual 34.2 %.
  • 14:30 US Crude Oil Inventories. Estimate -1.7M.
  • 17:01 US 10-year Bond Auction.
  • 18:00 US FOMC Meeting Minutes.
  • 23:50 Japanese Core Machinery Orders. Estimate 0.9%.
  • 23:50 Japanese Tertiary Industry Activity. Estimate 1.9%.
  • 23:50 Japanese Corporate Goods Price Index. Estimate 4.5%.

*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.