USD/JPY is trading quietly in Wednesday trading. In the European session, the pair is trading slightly below the 99 line. The markets are awaiting the FOMC Statement later on Wednesday. In economic news, today’s key event is US Building Permits. In Japan, we’ll get a look at the first release of the week, Trade Balance, late on Wednesday. The markets are expecting a lower deficit in the August reading.
All eyes are on the FOMC Statement, which will be released later on Wednesday, after the Federal Reserve winds up a two-day policy meeting. Fed chief Bernanke will follow up with a press conference. The markets have been speculating about QE tapering for months, and we could see the Fed take action in the upcoming statement. However, there is a stronger likelihood that QE tapering will not begin until later in the year, as US economic releases, particularly employment data, could be stronger. Traders should be prepared for some volatility from EUR/USD once the FOMC Statement is released.
Bernard Bernanke will step down as head of the US Federal Reserve at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.
What’s ailing the US economy? Last week’s releases were a disappointment, and this week’s releases have not impressed either. Empire State Manufacturing Index, an important release, posted another sharp drop in August. The indicator fell from 8.2 points to 6.3 points. This was way off the estimate of 9.2 points. On Tuesday, US inflation releases continue to point to very low inflation. Core CPI, a key event, posted a paltry gain of 0.1%. The markets will be hoping for some better news from today’s major release, US Building Permits.
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USD/JPY September 18 at 9:10 GMT
USD/JPY 98.86 H: 99.33 L: 98.79
- USD/JPY is showing little movement on Wednesday, as the pair hugs the 99 line.
- The pair continues to face resistance at 99.45. This is followed by the all-important 100 level.
- On the downside, USD/JPY is receiving support at 98.43. This line could face strong pressure if the dollar loses ground. There is stronger support at 97.83.
- Current range: 98.43 to 99.45
Further levels in both directions:
- Below: 98.43, 97.83, 97.18 and 96.20
- Above: 99.45, 100, 100.85, 101.66 and 102.53
OANDA’s Open Positions Ratio
USD/JPY ratio remains unchanged in Wednesday trading, continuing the trend we have seen all week. This is reflected in the pair’s current movement, which is trading in a narrow range. The ratio is made up of a solid majority of long positions, indicative of a strong trader bias towards the dollar moving to higher ground.
USD/JPY is showing little movement on Wednesday. This could change after the FOMC Statement later and Bernanke press conference later in the day. As well, we could see some movement from the pair if there are any surprises from US Building Permits, which will be released later on Wednesday.
USD/JPY Fundamentals
- 12:30 US Building Permits. Estimate 0.95M.
- 12:30 US Housing Starts. Estimate 0.93M.
- 14:30 US Crude Oil Inventories. Estimate -1.2M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Estimate
- 18:30 US FOMC Press Conference.
- 23:50 Japanese Trade Balance. Estimate -0.83T.