The Japanese yen continues its uneventful week. In Tuesday’s North American session, USD/JPY was trading at 108.91, down 0.04% on the day.
On the release front, Japanese consumer indicators were a mixed bag. Household spending disappointed with a decline of 0.1%, well off the estimate of 1.6%. There was better news from retail sales, which surged 3.6%, beating the estimate of 2.1%. This marks the strongest gain since May 2015.
On the inflation front, the Bank of Japan Core CPI rose 0.7%, its highest level since July 2015. Later on Wednesday, the Asian country released buoyant preliminary industrial production figures, as output leaped 2.7% in December from a month earlier, beating expectations of a 1.5% surge.
The yen has looked sharp in recent weeks, having gained 3.2% in January. Last week, a sell-off of the U.S. dollar pushed the Asian currency below the 109 level for the first time since September 2017. Last Wednesday, U.S. Treasury Secretary Steven Mnuchin stepped up pressure on the dollar when he stated that the country had no problem with a weak currency. Mnuchin has since backtracked, saying that his words were taken out of context and that the U.S. has a long-term interest in a strong dollar. President Donald Trump added that Mnuchin was misinterpreted, but the yen has held its own against the struggling greenback.
On Wednesday, there is a host of key indicators coming up from the U.S., led by the ADP Nonfarm Employment Change. And the Federal Reserve's monetary policy statement will be in the spotlight, with the markets expecting the benchmark rate to remain unchanged at a range between 1.25%-1.50%.
Investors will be keeping a close eye on the Fed's rate decision, the final one under Janet Yellen’s tenure. It’s a virtual certainty that the U.S. central bank will leave rates unchanged this time around, although it’s likely that it will raise rates by a quarter-point at its next meeting in March. Yellen will make way for Jerome Powell, who takes over as chair in early February. Powell is expected to hold the course on monetary policy, which was marked by small, incremental interest rates hikes in 2017, in order to keep the US economy from overheating.
USD/JPY Fundamentals
Monday (January 29)
- 18:30 Japanese Household Spending. Estimate +1.6%. Above -0.1%
- 18:30 Japanese Unemployment Rate. Estimate 2.7%. Above 2.8%
- 18:50 Japanese Retail Sales. Estimate 2.1%. Above 3.6%
Tuesday (January 30)
- 00:00 BoJ Core CPI. Estimate 0.5%. Actual 0.7%
- 9:00 US S&P/CS Composite-20 HPI. Estimate 6.3%. Actual 6.4%
- 10:00 US CB Consumer Confidence. Estimate 123.2. Actual 125.4
- 18:50 BoJ Summary of Opinions
- 18:50 Japanese Preliminary Industrial Production. Estimate 1.5%
- 21:00 President Trump Speaks
Wednesday (January 31)
- 8:15 US ADP Nonfarm Employment Change. Estimate 191K
- 8:30 US Employment Cost Index. Estimate 0.5%
- 9:45 US Chicago PMI. Estimate 64.3
- 10:00 US Pending Home Sales. Estimate 0.5%
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rate. Estimate
*All release times are GMT
*Key events are in bold
USD/JPY for Tuesday, January 30, 2018
USD/JPY January 30 at 11:45 EDT
Open: 108.96 High: 109.21 Low: 108.41 Close: 108.91
USD/JPY Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 106.14 | 107.29 | 108.21 | 109.11 | 110.10 | 111.53 |
USD/JPY edged lower in the Asian session. After posting small losses in European trade, the pair has reversed directions and posted gains in the North American session
- 108.21 is providing support
- 109.11 was tested earlier in resistance and is a weak line. It could see further activity in the North American session
Current range: 108.21 to 109.11
Further levels in both directions:
- Below: 108.21, 107.29 and 106.14
- Above: 109.11, 110.10, 111.53 and 112.57
OANDA’s Open Positions Ratios
USD/JPY is showing slight movement towards short positions. Currently, long positions have a majority (66%), indicative of trader bias towards USD/JPY reversing directions and moving higher.