USD/JPY – Slight Losses As Markets Await US Consumer Confidence Numbers

USD/JPY is down slightly on Tuesday, as the pair trades in the low-102 range in the European session. In economic news, the Japanese Corporate Services Price Index disappointed, as the inflation indicator weakened in January and fell short of the estimate. Today’s highlight is US Consumer Confidence, as the markets hope that the US can shake off a host of recent weak releases. There are no Japanese releases on Tuesday.

Is the US housing sector experiencing a downturn? Recent US numbers have not looked sharp, and the weak numbers are being felt in the housing industry. Building Permits slid to a five-month low in January, dropping to 0.94 million. The estimate stood at 0.98 million. Existing Home Sales looked awful, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales, which will be released on Wednesday.

There were no surprises from the BOJ minutes last week, as the central bank reiterated that the economy was growing at a moderate pace and it planned to continue its current monetary policy. The BOJ did note that it needed to be clear that its stimulus program could last more than two years. The central bank has said in the past that it was aiming to reach a level of 2% inflation within two years, but it does not want to be hamstrung by any deadlines, and said that quantitative and qualitative easing will continue as long as required. The BOJ’s estimate for GDP in fiscal 2013 remains unchanged at 2.7%, while the outlook for fiscal 2014 was lowered to 1.4% from 1.5%. On the inflation front, the forecast for fiscal 2013 is 0.7%, jumping to 3.3% in fiscal 2014. On Monday, Japanese inflation numbers did not impress, as the Corporate Services Price Index posted a gain of 0.8%, well below the estimate of 1.2% and its weakest gain in three months.

USD/JPY for Tuesday, February 25, 2014

USD/JPY February 25 at 14:50 GMT

USD/JPY 102.24 H: 102.63 L: 102.23

USD/JPY Technical

• USD/JPY has posted modest losses on Tuesday. The pair lost ground in the Asian session, dropping to a low of 102.17. The pair been losing ground since late in the Asian session.
• On the upside, 102.53 remains under pressure and could be tested during the day. There is stronger resistance at 103.30.
• 101.19 is providing support. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions in Tuesday trading. This is not consistent with what we are seeing from the pair, as the yen has posted modest gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar posting gains against the yen.

The yen is pushing higher on Tuesday. USD/JPY continues to move lower in the North American session, and we could see the pair dip below the 102 line during the day.

USD/JPY Fundamentals

• 14:00 US S&P/CS Composite-20 HPI. Exp. 13.3%.
• 14:00 US HPI. Exp. 0.4%.
• 15:00 US CB Consumer Confidence. Exp. 80.2 points.
• 15:00 US Richmond Manufacturing Index. Exp. 13 points.
• 15:10 US FOMC Member Daniel Tarullo Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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