USD/JPY – Little Movement As Current Account Falters

USD/JPY is showing little movement on Monday. In the European session, the pair is trading in the low-99 range. The US dollar was up sharply on Friday, following an excellent Non-Farm Payrolls release. Japanese Current Account disappointed, posting its first deficit in a year. There are no US releases on Monday, as US markets are closed for a holiday.

Japanese Current Account, which is closely linked to currency demand, posted a deficit of 0.13 trillion yen, slightly larger than the estimate of -0.10 trillion. The weak figure is raising concerns since it marks the first decline since October 2012. Economy Watchers Sentiment also disappointed, dropping to 51.8 points from 52.8. This was well below the estimate of 54.2 points.

The markets had very low expectations from Non-Farm Payrolls, one of the most important economic indicators. The estimate for the October release stood at just 121 thousand, as there was concern that the reading would be artificially low due to the government shutdown in October. However, the indicator put those concerns to rest, as the indicator soared to 204 thousand, its highest level in eight months. The outstanding NFP figure bolstered the US dollar against the major currencies, and has increased speculation that the Fed might press the tapering trigger in December. Such talk could bolster the US currency, as a reduction in QE is bullish for the dollar. At the same time, speculation about a scaling down in QE introduces some uncertainty and volatility in the currency markets.

The BOJ released the minutes of its last policy meeting earlier in the week, and the board’s members were cautiously optimistic about the economy, referring to the economic recovery as “moderate”, stating that exports had picked up, and other sectors such as consumer spending and industrial production were stable. The Bank noted that inflation was increasing and moving towards the target of 2%. The BOJ said it would continue to expand the monetary base by 60-70 trillion yen per year, and maintain the purchase of government bonds by 50 trillion yen each year. The downside of the Bank’s aggressive monetary policy has been the shrinking value of the yen, which is once again close to the key 100 level.

USD/JPY for Monday, November 11, 2013

USD/JPY November 11 at 12:10 GMT

USD/JPY 98.18 H: 98.22 L: 97.92

USD/JPY Technical

• USD/JPY is showing very little movement on Monday. The pair spent most of the Asian session close to the 99 line and has edged higher in the European session.
• On the downside, 98.15 is under strong pressure. The next support level is at 97.18.
• On the upside, the pair continues to face resistance at 98.92. This line is followed by the key level of 100, which has held firm since mid-September.
• Current range: 98.15 to 98.92

Further levels in both directions:

• Below: 98.15, 97.18, 96.00, 95.06 and 94.20
• Above: 98.92, 100, 101.19 and 102.53

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to movement towards short positions in Monday trading. This is not reflected in the current movement of the pair, which is showing little movement. The ratio continues to be dominated by long positions, indicative of a strong trader bias towards the US dollar moving higher.

The pair is trading quietly in the low-98 range. With the US markets closed for a holiday, it could be an uneventful North American session for USD/JPY.

USD/JPY Fundamentals

• 5:00 Japanese Economy Watchers Sentiment. Estimate 54.2 points. Actual 51.8 points.
• 23:50 Japanese Tertiary Industry Activity. Estimate 0.2%.
• 23:50 Japanese M2 Money Stock. Estimate 3.9%.

*Key releases are highlighted in bold

*All release times are GMT

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