USD/JPY – Yen Improves to 113, Fed Minutes Next

The Japanese yen has improved in the Wednesday session. Currently, USD/JPY is trading at the 113 level. In economic news, the US releases Existing Home Sales and the Federal Reserve will publish the minutes of the January policy meeting. Later in the day, Japan releases SPPI, an important inflation indicator. The forecast for the January report is 0.4%, unchanged from the December reading. On Thursday, the US releases unemployment claims, with an estimate of 242 thousand.

The Federal Reserve will be on center stage on Wednesday. The central bank finally pressed the rate trigger in December, a full year after the previous rate hike. Last week, Fed Chair Janet Yellen strongly hinted that that another hike is on the way, leaving the markets to speculate on the timing of a hike – will it be in March or June? Even though the US economy is solid and we could see several rate hikes in 2017, market uneasiness over the Trump administration continues to grow, dampening investor appetite for risk. Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump is yet to outline a clear and coherent economic policy, although he has promised to unveil a tax package in the next few weeks. After Trump’s shock win in November, post-election euphoria boosted the markets. However, Trump’s first month in office has been marked by controversy and confusion, which has unsettled the markets.

USD/JPY Fundamentals

Wednesday (February 22)

• 10:00 US Existing Home Sales. Estimate 5.55M
• 13:00 US FOMC Member Jerome Powell Speech
• 14:00 US FOMC Meeting Minutes
• 18:50 Japanese SPPI. Estimate 0.4%

Thursday (February 23)

• 8:30 US Unemployment Claims. Estimate 242K

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, February 22, 2017

USD/JPY February 22 at 6:55 EST

Open: 113.67 High: 113.68 Low: 112.96 Close: 113.01

USD/JPY Technical

USD/JPY has posted losses in the Asian and European sessions

• 112.57 is providing support
• 113.80 has some breathing room in support following losses by USD/JPY
• Current range: 112.57 to 113.80

Further levels in both directions:

• Below: 112.57, 110.94 and 109.77
•  Above: 113.80, 114.83, 115.90 and 116.70

OANDA’s Open Positions Ratio

USD/JPY ratio is showing slight movement towards short positions. Currently, long positions have a majority (55%), indicative of trader bias towards USD/JPY continuing to move upwards.

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