USD/JPY – Solid Japanese Retail Sales, CPI fail to Move Yen

USD/JPY has edged higher in Friday trading, as the pair trades in the low-102 range. In economic news, Japanese Retail Sales and CPI numbers were solid, but Household Spending surprised the markets with a sharp decline in February. In the US, Unemployment Claims continued to post strong releases, and Final GDP met expectations. However, Pending Home Sales disappointed, with its second decline in three releases. Today’s highlight is Revised UoM Consumer Sentiment.

US Unemployment Claims continues to impress. The key indicator dropped to 311 thousand, its lowest level in over three months. The estimate was 326 thousand, marking the fourth straight week that the reading has come in below the forecast. The news was not as good from Pending Home Sales, with a reading of -0.8%. This disappointed the markets, which had expected a small gain of 0.1%. Earlier in the week, New Home Sales also lost ground in February, and concern is bound to increase about the health of the US housing industry. Final GDP posted a gain of 2.6% in Q4, just shy of the estimate of 2.7%. This was lower than the Q3 gain, but is indicative of a growing economy.

Japanese Retail Sales, the primary gauge of consumer spending, continues to look strong. The indicator posted a sharp gain of 3.6%, beating the estimate of 3.4%. At the same time, Household Spending, another consumer spending indicator, fell by 2.5%, its worst showing in over two years. Inflation indicators remain steady, as Tokyo Core CPI and National Core CPI met expectations. The yen didn’t show any improvement despite the generally strong numbers.

Ukraine’s economy is in shambles as a result of the four-month political crisis which led to the ouster of the government and the Russian annexation of the Crimean region. Prime Minister Arseniy Yatsenyuk acknowledged that the country is on the edge of bankruptcy, and GDP could drop by as much as 3% this year. However, help is on the way. The IMF is set to sign a two-year loan of up to $18 billion, and the EU has offered a package of EUR 11 billion. Ukraine has already received two bailouts from the IMF since 2008, and will have to implement budget cuts and other measures in order to receive the new package from the IMF.

USD/JPY for Friday, March 28, 2014

USD/JPY March 28 at 11:40 GMT

USD/JPY 102.31 H: 102.34 L: 102.04

USD/JPY Technical

• USD/JPY continues to trade above the 102 line.
• 102.53 remains a weak resistance line and could be tested during the day. This is followed by strong resistance at 103.30.
• 101.19 is providing support. The next support line is the key level of 100.00, which has held firm since last 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 towards short positions on Friday, continuing the trend we saw a day earlier. This is not consistent with the pair’s movement, as the dollar has posted slight gains. Long positions make up a majority of the open positions in the ratio, indicating trader bias towards the dollar continuing to move higher.

USD/JPY remains firm and has edged higher in the European session.

USD/JPY Fundamentals

• 00:20 US FOMC Member Daniel Tarullo Speaks.
• 12:30 US Core PCE Price Index. Estimate 0.1%.
• 12:30 US Personal Spending. Estimate 0.3%.
• 12:30 US Personal Income. Estimate 0.4%.
• 13:55 US Revised UoM Consumer Sentiment. Estimate 80.6 points.
• 13:55 US Revised UoM Inflation Expectations.

*Key releases are highlighted in bold

*All release times are GMT

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