USD/JPY – Yen Dips on Mixed Japanese Numbers

USD/JPY has lost ground in the Thursday session. Currently, the pair is trading at 113.40. On the release front, Japanese Current Account beat the estimate, while Final GDP came in at 0.6%, short of expectations. The US will release unemployment claims, with an estimate of 258 thousand.

Japanese numbers were a mix late Wednesday. The current account surplus jumped to JPY 1.93 trillion, easily beating the forecast of JPY 1.57 trillion. Final GDP for the third quarter edged up to 0.3%, but this fell short of the forecast of 0.6%. This figure disappointed the markets, as Preliminary GDP for Q3 came in at 0.5%. This downward revision will likely renew fears of a weakening recovery. The Bank of Japan will meet on December 18, and is expected to leave interest rates unchanged at -0.10%. Despite a sluggish economy, the bank has been hesitant to step in and ease policy, as negative rates have done little to kick-start economic growth or raise anemic inflation levels.

The Federal Reserve meets next week for its monthly policy meeting, the first after Donald Trump’s election as president. The markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and market anticipation of a hike has translated into strong gains for the greenback. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has stated that he plans to increase government spending and cut taxes, which could lead to higher inflation levels. This means that the Fed may need to adjust its outlook when the new administration’s policies become clearer.

USD/JPY Fundamentals

Wednesday (December 7)

• 18:50 Japanese Current Account. Estimate 1.57T. Actual 1.93T
• 18:50 Japanese Final GDP. Estimate 0.6%. Actual 0.3%

Thursday (December 8)

• 00:00 Japanese Economy Watchers Sentiment. Estimate 45.6. Actual 48.6
• 13:30 US Unemployment Claims. Estimate 258K
• 15:30 US Natural Gas Storage. Estimate -44B
• 18:50 Japanese BSI Manufacturing Index. Estimate 3.4
• 18:50 Japanese M2 Money Stock. Estimate 3.2%

Friday (December 9)

• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 94.3

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, December 8, 2016

USD/JPY December 8 at 11:50 EST

Open: 113.73 High: 113.86 Low: 113.04 Close: 113.44

USD/JPY Technical

• USD/JPY posted losses in the Asian session. In European trade, the pair posted gains but has retracted
• 112.48 is providing support
• 113.86 was tested in resistance earlier
• Current range: 112.48 to 113.86

Further levels in both directions:

• Below: 112.48, 111.45 and 110.24
•  Above: 113.86, 114.13, 115.45 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Thursday session. Currently, short positions have a strong majority (60%), indicative of trader bias towards USD/JPY continuing to lose ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.