USD/JPY – Dollar Rises to 113, Markets Eye OPEC Meeting

USD/JPY continues to rally on Wednesday, as the pair has punched above the 113 line. On the release front, Japan will release Capital Spending and Final Manufacturing PMI. The US will release ADP Nonfarm Employment Change, with the markets predicting an improvement of 161 thousand. As well, OPEC members will meet in Vienna, hoping to reach an agreement to cap oil production. On Thursday, the US releases unemployment claims and the ISM Manufacturing PMI.

Japanese consumers remains in a sour mood, as consumer spending indicators continue to decline. Household Spending declined 0.4%, while Retail Sales dipped 0.1%. Although these readings were better than the forecasts, the yen responded with losses of 1.1%. Meanwhile, the economy continues to grapple with deflation. Tokyo Core CPI, the primary gauge of consumer inflation, which came in at -0.4% in the November report, has failed to post a gain in 2016. The BoJ has failed to kick-start inflation or boost growth, despite radical easing measures such as negative interest rates. Japanese policymakers have indicated that the government may resort to fiscal stimulus in order to increase economic growth, given the inability of the BoJ to improve the economy.

US indicators impressed on Tuesday. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money. CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

OPEC Deal Uncertain as Ministers Meet in Vienna

USD/JPY Fundamentals

Wednesday (November 30)

• 00:00 Japanese Housing Starts. Estimate 11.5%. Actual 13.7%
• All Day – OPEC Meetings
• 8:15 US ADP Nonfarm Employment Change. Estimate 161K
• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.5%
• 8:30 US Personal Income. Estimate 0.4%
• 9:45 US Chicago PMI. Estimate 52.1
• 10:00 US Pending Home Sales. Estimate 0.3%
• 10:30 US Crude Oil Inventories. Estimate 0.7M
• 11:45 US FOMC Member Jerome Powell Speech
• 14:00 US Beige Book
• 18:50 Japanese Capital Spending. Estimate -0.4%
• 19:30 Japanese Final Manufacturing PMI. Estimate 51.1
• 22:45 Japanese 10-year Bond Auction

Upcoming Key Events

Thursday (December 1)

• 8:30 US Unemployment Claims. Estimate 252K
• 10:00 US ISM Manufacturing PMI. Estimate 52.1

*All release times are EST

*Key events are in bold

USD/JPY for Wednesday, November 30, 2016

USD/JPY November 30 at 6:20 EST

Open: 112.46 High: 113.17 Low: 112.02 Close: 113.12

USD/JPY Technical

• USD/JPY has posted slight gains in the Asian and European sessions
• 112.48 is providing support
• There is resistance at 113.86
• Current range: 112.48 to 113.86

Further levels in both directions:

• Below: 112.48, 111.45, 110.68 and 109.47
•  Above: 113.86, 114.13 and 115.45

OANDA’s Open Positions Ratio

USD/JPY ratio remains unchanged this week. Currently, short positions have a majority (56%), indicative of trader bias towards USD/JPY reversing directions and moving lower.

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.