USD/JPY - Rangebound Ahead Of Japanese GDP

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

By Kenny Fisher

The Japanese yen is flat on Tuesday, as the pair trades slightly above the 102 line late in the European session. In economic news, today's US highlight is the JOLTS Job Openings, with the markets expecting a strong reading. In Japan, Revised Industrial Production posted a sharp decline of 3.4%, well short of expectations. Later in the day, we'll get a look at the GDP, one of the most important economic indicators, as well as the minutes of the last BOJ policy meeting.

Is the Japanese manufacturing sector in trouble? Japanese manufacturing indicators continue to post declines this week. Tertiary Industry Activity came in at -0.1%, short of the estimate of a 0.2% gain. Revised Industrial Production dropped 3.4% last month, its steepest fall since October 2012. Meanwhile, the market's eyes are on the Japanese GDP, which will be released later on Tuesday. The markets are braced for a decline of 1.7% in Q2, which would mark the first drop in economic activity since Q4 of 2012. Traders should be prepared for the yen to lose ground if the GDP posts a weak reading.

In the US, employment indicators are under the market microscope, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate hike is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a rate move. We'll get a look at JOLTS Jobs Openings later on Tuesday. The indicator has been on an upswing and exceeded the estimate in the past two releases. Another rise is expected in the July release, with the estimate standing at 4.74 million.

USD/JPY for Tuesday, August 12, 2014

USD/JPY August 12 at 12:55 GMT

USD/JPY 102.17 H: 102.28 L: 102.14

USD/JPY Technical

S3 S2 S1 R1 R2 R3
98.84 100.00 101.19 102.53 103.07 104.17
Click to enlarge
  • USD/JPY was flat in the Asian session. The pair has edged down in European trade.
  • 101.19 remains a strong support level.
  • 102.53 is an immediate resistance line. 103.07 is stronger.
  • Current range: 101.19 to 102.053

Further levels in both directions:

  • Below: 101.19, 100, 98.84 and 98.09
  • Above: 102.53, 103.07, 104.17 and 105.44

OANDA's Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Tuesday, continuing the direction seen a day earlier. This is consistent with the movement we're seeing from the pair, as the yen has posted small losses. The ratio continues to have a majority of long positions, indicating trader bias towards the dollar strengthening at the expense of the yen.

USD/JPY Fundamentals

  • 3:45 Japanese 30-year Bond Auction. Actual 1.68%.
  • 4:30 Japanese Revised Industrial Production. Estimate +0.5%. Actual -3.4%.
  • 11:30 US NFIB Small Business Index. Estimate 96.3 points. Actual 95.7 points.
  • 14:00 US JOLTS Job Openings. Estimate 4.74M.
  • 18:00 US Federal Budget Balance. Estimate -98.2B.
  • 23:50 Japanese Preliminary GDP. Estimate -1.7%.
  • 23:50 BOJ Monetary Policy Meeting Minutes.
  • 23:50 Japanese Preliminary GDP Price Index. Estimate +1.7%.

* 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.