USD/JPY – Yen Edges Higher on Strong Japanese Retail Sales, BOJ Decision Next

USD/JPY has edged higher in Monday trade. In the North American session, USD/JPY is trading at 113.43, down 0.22% on the day. On the release front, Japanese Retail Sales posted a strong gain of 2.2%, just shy of the estimate of 2.3%. In the US, Personal Spending gained 1.0%, above the forecast of 0.8%. On Tuesday, the Bank of Japan releases its monetary statement. The US will publish CB Consumer Confidence.

All eyes are on the BoJ, which will release a rate statement on Tuesday. The Bank is expected to hold course with its ultra-accommodative monetary policy, and also maintain its inflation forecasts. Policymakers appear resigned to persistently weak inflation – at the September meeting, the BoJ stated that it did not expect inflation to reach the Bank’s 2 percent target until fiscal year 2020. BoJ Governor Haruhiko Kuroda has long insisted that the bank will not taper its stimulus program until inflation moves higher. Despite weak inflation and wage growth, there has not been much pressure on the Bank to change policy, as the Japanese economy has performed well in 2017. GDP expanded at an annualized 2.5 percent in the second quarter, buoyed by solid numbers from the manufacturing and export sectors. Consumer spending has improved, and retail sales in September improved 2.3%, compared to 1.7% a month earlier. Retail sales have risen for 11 consecutive months, as consumers appear more confident in the economy and have opened their purse strings.

The week ended on a positive note in the US, as Advance GDP in third quarter jumped 3.0%, well above the estimate of 2.5%. The economy was boosted by strong consumer spending and business investment, as well as a strong export sector. The economy could have done even better in Q3, but hurricanes which hit Texas, Florida and Puerto Rico caused widespread damage. Consumer confidence remains strong, as Revised UoM Consumer Sentiment soared to 100.7 points in September, compared to 95.1 a month earlier. On Tuesday, CB Consumer Confidence is expected at 121.1 points. 

USD/JPY Fundamentals

Sunday (October 29)

• 19:50 Japanese Retail Sales. Estimate 2.3%. Actual 2.2%

Monday (October 30)

• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.8%. Actual 1.0%
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
• Tentative – US Loan Officer Survey
• 19:30 Japanese Household Spending. Estimate 0.7%
• 19:30 Japanese Unemployment Rate. Estimate 2.8%
• 19:50 Japanese Preliminary Industrial Production. Estimate -1.5%
• Tentative – BoJ Monetary Policy Statement

Tuesday (October 31)

• Tentative – BoJ Outlook Report
• Tentative – BoJ Policy Rate. Estimate -0.10%
• 1:00 BoJ Core CPI. Estimate 0.5%
• 1:00 Japanese Housing Starts. Estimate -3.0%
• 2:30 BoJ Press Conference
• 10:00 US CB Consumer Confidence. Estimate 121.1

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, October 30, 2017

USD/JPY October 30 at 10:40 EDT

Open: 113.68 High: 113.84 Low: 113.37 Close: 113.43

USD/JPY Technical

USD/JPY showed little movement in the Asian and European sessions. The pair has edged lower in North American trade

• 112.57 is providing support
• 13.55 was tested earlier in resistance and is a weak line

Current range: 112.57 to 113.55

Further levels in both directions:

• Below: 112.57, 110.94 and 110.10
• Above: 113.55, 114.49, 115.50 and 116.54

OANDA’s Open Positions Ratios

USD/JPY ratio is showing movement towards short positions. Currently, short positions have a majority (57%), indicative of trader bias towards USD/JPY continuing to move downwards.

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.