USD/JPY - Yen Improves As Chinese Trade Data Slumps

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By Kenny Fisher

USD/JPY has posted gains on Thursday, as the pair is trading at 103.80. On the release front, Japanese Tertiary Industry Activity declined came in at 0.0%, beating the estimate. The US will release Unemployment Claims, with the markets expecting a strong reading of 252 thousand. On Friday, we could see some movement from USD/JPY, as the US releases inflation, retail sales and consumer confidence numbers.

The yen showed improvement on Thursday, following weak Chinese trade numbers China’s trade surplus slipped to $278 billion in September, compared to $346 billion a month earlier. This was well short of the forecast of $365 billion, and marked a 6-month low. The currency lost ground earlier this week, following dovish remarks from the Bank of Japan. Governor Haruhiko Kuroda stated that the BoJ is unlikely to meet its 2 percent inflation target until 2018, rather than in 2017. Kuroda added that the BoJ had no intention of changing course, saying it would continue or even strengthen monetary easing in order to achieve its inflation target. Last week, the yen pushed across the 104 line for the first time since early September. The next BoJ policy meeting takes place on October 31 and the markets will be looking for hints as to whether the bank intends to remain on the sidelines.

On Wednesday, the Federal Reserve released the minutes of its last policy meeting. The minutes contained no dramatic news, but point to deep divisions in the FOMC over monetary policy. This was already apparent in the September rate vote, when three members voted against the decision to maintain rates at 0.25 percent. The minutes indicated that some of the members who voted to hold rates chose to fall in line with Janet Yellen, but are in favor of raising rates “relatively soon”. This means that Yellen will face a tough battle if she wants to hold off a rate in December, given that there is significant support for rate hike in December. The markets have priced in a December hike at 66 percent and the positive sentiment could help the US dollar continue to move higher. The Fed will next meet in November, but analysts don’t expect a move just a week before the presidential election.

USD/JPY Fundamentals

Thursday (October 13)

  • 00:30 Japanese Tertiary Industry Activity. Estimate -0.2%. Actual 0.0%
  • 8:30 US Unemployment Claims. Estimate 252K
  • 8:30 US Import Prices. Estimate 0.1%
  • 10:30 US Natural Gas Storage. Estimate 84B
  • 11:00 US Crude Oil Inventories. Estimate 0.4M
  • 13:01 US 30-year Bond Auction
  • 19:50 Japanese M2 Money Stock. Estimate 3.4%
  • 19:50 Japanese PPI. Estimate -3.2%

Friday (October 14)

  • 12:30 US Core Retail Sales. Estimate 0.4%
  • 12:30 US PPI. Estimate 0.2%
  • 12:30 US Retail Sales. Estimate 0.6%
  • 14:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
  • 17:30 US Federal Chair Janet Yellen Speaks

*All release times are EDT

*Key events are in bold

USD/JPY for Thursday, October 13, 2016

USD/JPY October 13 at 9:05 EDT

Open: 104.30 High: 104.64 Low: 103.54 Close: 103.81

USD/JPY Technical

S3 S2 S1 R1 R2 R3
101.20 102.36 103.02 104.32 105.44 106.72
Click to enlarge
  • USD/JPY posted sharp losses in the Asian session and has been choppy in the European session
  • 103.02 is providing support
  • There is weak resistance at 104.32
  • Current range: 103.02 to 104.32

Further levels in both directions:

  • Below: 103.02, 102.36, 101.20 and 100.55
  • Above: 104.32, 105.44 and 106.72

OANDA’s Open Positions Ratio

USD/JPY ratio is showing long positions with a majority (58%), in the Thursday session, indicative of trader bias towards USD/JPY reversing directions and moving higher.

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.