USD/JPY – Dollar Rebounds, Pushes Above 112 Yen

The US dollar is broadly higher in Tuesday trading. USD/JPY is also higher, as the pair currently trades at 112.40. On the release front, there are no major Japanese events on the schedule. Over in the US, the trade deficit is expected to edge lower to $45.0 billion. On the employment front, JOLTS Jobs Openings is expected to improve to 5.56 million.

Japanese Prime Minister Shinzo Abe will meet with President Trump in Washington on Friday, and the Japanese are hoping to sooth some ruffled furthers on the American side. Trump recently accused Japan of unfair trade practices in its ultra-loose monetary policy, which has kept the yen at low levels and helped boost Japanese exports. The Japanese have argued that they are not targeting the yen’s value, but have their work cut out for them in trying to assuage Trump, who hasn’t hesitated to fire verbal salvos at the United States’ closest trading partners. Japan is heavily reliant on its export sector, and Abe will be hoping that Trump’s protectionist rhetoric does not translate into actual moves against Japan, which can ill afford a trade war with the US.

Just a few weeks on the job, President Donald Trump continues to create controversy and his protectionist rhetoric is not endearing him to the markets. Moreover, the lack of an economic policy from the new administration is a major source of concern and the the post-election euphoria which sent the markets higher has dissipated. The Federal Reserve, which had trumpeted that it was planning a series of hikes in 2017 (sound familiar?), was more cautious in its recent rate statement and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar. On the other hand, if Trump makes good on his promises to “make America first” and implement protectionist policies, the greenback could lose ground against major currencies such as the yen.

USD/JPY Fundamentals

Tuesday (February 7)

• 00:00 Japanese Leading Indicators. Estimate 105.6%. Actual 105.2%
• 8:30 US Trade Balance. Estimate -45.0B
• 10:00 US JOLTS Job Openings. Estimate 5.56M
• 10:00 US IBD/TIPP Economic Optimism. Estimate 5.56M
• 15:00 US Consumer Credit. Estimate 20.3B
• 18:50 BoJ Summary of Opinions
• 18:50 Japanese Bank Lending. Estimate 2.7%
• 18:50 Japanese Current Account. Estimate 1.71T

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, February 7, 2017

USD/JPY February 7 at 7:05 EST

Open: 111.82 High: 112.50 Low: 111.58 Close: 112.41

USD/JPY Technical

USD/JPY showed limited movement in the Asian session and has posted gains in European trade

• 110.94 is providing support
• 112.57 was tested earlier in resistance and is a weak line. It could break in the Tuesday session
• Current range: 110.94 to 112.57

Further levels in both directions:

• Below: 110.94, 109.85 and 108.61
•  Above: 112.57, 113.80, 114.83 and 115.90

OANDA’s Open Positions Ratio

USD/JPY ratio is showing little movement in the Tuesday session. Currently, long positions have a slender majority (52%), indicative of slight trader bias towards USD/JPY continuing to climb 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.