USD/JPY – Yen Up As Japanese Manafacturing Data Impresses

The Japanese yen has posted modest gains on Thursday, as USD/JPY trades in the mid-102 range. Japan released strong manufacturing data, as Core Machinery Orders posted its largest gain in ten months. In the US, today’s highlights are Retail Sales and Unemployment Claims. The sole Japanese release is the BOJ’s Monetary Policy Meeting Minutes.

There were no surprises from the BOJ, which released its Monetary Policy Statement on Tuesday. The BOJ said it would continue to expand monetary policy by 60-70 trillion each year. The Bank sounded optimistic about the economy, noting that economic growth and inflation are in line with its forecasts. The BOJ’s aggressive monetary policy has severely weakened the yen, and we could see the currency continue to struggle against the US dollar.

Tuesday’s US employment numbers disappointed, as JOLTS Job Openings dipped to 3.97 million in February. This fell short of the estimate of 4.02 million and marked a three-month low. On Friday, Nonfarm Payrolls jumped to 175 thousand in February, compared to just 113 thousand last month. This easily beat the estimate of 151 thousand. We’ll get a look at Unemployment Claims later on Thursday, with the markets expecting the key indicator to climb after last week’s strong release. A better than expected reading could give a boost to the US dollar.

With the US posting solid Unemployment Claims and Nonfarm Payrolls late last week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

USD/JPY for Thursday, March 13, 2014

USD/JPY March 13 at 13:00 GMT

USD/JPY 102.66 H: 102.86 L: 102.42

USD/JPY Technical

• The pair is facing resistance at 103.30. This is followed by a resistance line at 104.17, which has remained intact since late January.
• 102.53 is providing support. This weak line could be tested during the day if the yen continues to move higher. The next support level is at 101.19.
• Current range: 102.53 to 103.30

Further levels in both directions:

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

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions, continuing the trend we have seen for most of the week. Long positions make up a majority of the open positions in the ratio, indicating trader bias towards the dollar moving higher.

USD/JPY is trading in the mid-102 range. The pair has edged higher in the European session.

USD/JPY Fundamentals

• 12:30 US Core Retail Sales. Estimate 0.2%.
• 12:30 US Retail Sales. Estimate 0.3%.
• 12:30 US Unemployment Claims. Estimate 334K.
• 12:30 US Import Prices. Estimate 0.6%.
• 14:00 US Business Inventories. Estimate 0.4%.
• 14:00 US Federal Reserve Governor Nomination Hearings.
• 14:30 US Natural Gas Storage. Estimate -199B.
• 17:01 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -223.2B
• 23:50 Bank of Japan Monetary Policy Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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