The Japanese yen has posted slight gains in the Thursday session. In North American trade, USD/JPY is trading at 106.90, up 0.21% on the day. On the release front, it’s a busy day. In Japan, Capital Spending gained 4.3%, beating the estimate of 3.1%. Final Manufacturing PMI dropped to 54.1, within expectations. Consumer confidence slowed to 44.3, shy of the estimate of 44.9 points. Later in the day, Japan releases Household Spending and Tokyo Core CPI. In the US, Personal Spending slowed to 0.2%, matching the forecast. Unemployment claims dropped to an impressive 210 thousand, well below the estimate of 222 thousand. Next up, Fed chair Jerome Powell testifies before the Senate Banking Committee. On Friday, the US publishes UoM Consumer Sentiment.
Jerome Powell will be on center stage on Thursday, as he testifies before the Senate Banking Committee. Powell addressed the House Finance Committee on Tuesday, and his remarks were decidedly hawkish. Fed chair said that the current policy of gradual rate increases would continue. He added that the economy was strong and that he expected inflation to move up to the Fed target of 2 percent. Importantly, Powell did not address the question of an acceleration of rate hikes, but his hawkish stance has increased the likelihood that the Fed will increase it projection from three to four rate hikes this year. Any hints that Fed will quicken its pace of rate hikes would be bullish for the US dollar.
US revised GDP came in at 2.5% in the fourth quarter, down from the initial estimate of 2.6% in January. This is considerably lower than the 3.2% expansion in the third quarter. The downward revision was attributed to lower inventory than expected. Importantly, consumer spending, a key driver of economic growth, remained unchanged at 3.8% percent in the fourth quarter. Despite the lower revision to GDP, sentiment remains positive on the US economy, and Jerome Powell’s hawkish testimony earlier this week marks an important vote of confidence in the US economy.
USD/JPY Fundamentals
Wednesday (February 28)
- 18:50 Japanese Capital Spending. Estimate 3.1%. Actual 4.3%
- 19:30 Japanese Final Manufacturing PMI. Estimate 54.0. Actual 54.1
Thursday (March 1)
- 00:00 Japanese Consumer Confidence. Estimate 44.9. Actual 44.3
- 8:30 US Core PCE Price Index. Estimate 0.3%. Actual 0.3%
- 8:30 US Personal Spending. Estimate 0.2%. Actual 0.2%
- 8:30 US Unemployment Claims. Estimate 226K. Actual 210K
- 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%
- 9:45 US Final Manufacturing PMI. Estimate 55.9
- 10:00 US Fed Chair Powell Testifies
- 10:00 US ISM Manufacturing PMI. Estimate 58.7
- 10:00 US Construction Spending. Estimate 0.3%
- 10:00 US ISM Manufacturing Prices. Estimate 70.5
- 10:30 US Natural Gas Storage. Estimate -71B
- All Day – US Total Vehicle Sales. Estimate 17.2M
- 18:30 Japanese Household Spending. Estimate -0.3%
- 18:30 Japanese Tokyo Core CPI. Estimate 0.8%
- 18:30 Japanese Unemployment Rate. Estimate 2.8%
- 18:50 Japanese Monetary Base. Estimate 9.2%
Friday (March 2)
- 10:00 US Revised UoM Consumer Sentiment. Estimate 99.2
*All release times are EST
*Key events are in bold
USD/JPY for Thursday, March 1, 2018
USD/JPY March 1 at 9:35 EST
Open: 106.67 High: 106.94 Low: 106.55 Close: 106.93
USD/JPY Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 104.32 | 105.53 | 106.64 | 107.29 | 108.00 | 109.11 |
USD/JPY edged higher in the Asian session. The pair showed little movement in the European sessions and has moved higher in North American trade
- 106.64 was tested earlier in support
- 107.29 is the next resistance line
Current range: 106.64 to 107.29
Further levels in both directions:
- Below: 106.64, 105.53 and 104.32
- Above: 107.29, 108.00, 109.11 and 110.48
OANDA’s Open Positions Ratios
USD/JPY ratio is almost unchanged in the Thursday session. Currently, long positions have a majority (70%), indicative of trader bias towards USD/JPY reversing directions and moving lower.