USD/JPY – Volatile as Pair Continues to Pressure 93 Level

JPY/USD continues to be volatile, as the pair puts strong pressure on the 93 level. This line has already been breached this week, but the pair was unable to sustain the upward move. US data continues to worry the markets, with a weak Factory Orders Release. Tuesday’s key US indicator is ISM Non-Manufacturing PMI. Tuesday’s only Japanese release is a speech by BOJ Governor Masaaki Shirakawa. The markets will be all ears, as the Governor speaks at the Bank of Japan in Tokyo.

The Japanese yen continues to trade at multi-year highs, as USD/JPY continues to put pressure on the 93 line. The yen has now posted declines for 12 straight weeks, shedding 12% of its value against the US dollar. The Japanese currency has now claimed the dubious honor of being the world’s worst-performing currency in 2013. The Bank of Japan has quickly towed the line with the government’s new economic program, introducing new monetary easing measures. The BOJ has doubled its inflation target to 2%, and announced open-ended asset purchases, which will begin in 2014. BOJ Deputy Governor Hirohide Yamaguchi, who will step down in April, reiterated the government’s claim that the central bank’s monetary easing steps are not directly aimed at weakening the yen. Despite these statements, it is clear that the yen is not receiving any support from either the government or the BOJ, and the markets are expecting more easing measures from the authorities. Many analysts are saying that a 95-level yen is only a matter of time.

Where is the US economy headed? US economic numbers continues to keep the markets guessing about the extent of the US recovery. The recent GDP release was a major disappointment, as the economy contracted for the first time since 2009. Employment numbers lost their recent shine, as NFP and Unemployment Claims failed to meet expectations, and the unemployment rate inched up to 7.9%. On the bright side, consumer sentiment and manufacturing data have been solid. UoM Consumer Sentiment climbed to 73.8 points, well above the estimate. ISM Manufacturing PMI also was sharp, posting an eight-month high. With only a handful of key US releases this week, the markets will continue to try and  get a handle on the health of the US economy. The week started off on a sour note, as US Factory Orders came in well below expectations. The manufacturing indicator rose 1.8%, but this was well off the forecast of a 2.3% gain.

USD/JPY for Tuesday, February 5, 2013

USD/JPY February 5 at 11:00 GMT

USD/JPY 92.99 H: 93.04 L: 91.98

USD/JPY is volatile, but the proximate ressitance and support line remain intact (S1 and R1 above). USD/JPY continues to test the 93 line. Will this attempt to push into 93 territory be successful? The pair continues to receive support at 92.53. This is followed by a stronger line at 91.94. On the upside, there is weak resistance at 93.14, but this line is holding on as the pair has been unable to sustain an upward move above the 93 line. Look for this line to face more pressure during the day. This is followed by resistance at 93.73.

• Current range: 92.53 to 93.14.

Further levels in both directions:

• Below: 92.53, 91.94, 91.30, 91.94, 90.91, 90.23, 89.85 and 89.31.
• Above: 93.14, 93.73, 94.11, 94.59, 95.27, 96.06.

OANDA’s Open Position Ratios

The USD/JPY ratio is currently showing little activity. The currency pair is very active, but has not shown much net movement this week, with sharp moves in both directions. The ratio continues to almost evenly split between the long and short components, as trader sentiment remains evenly divided as to whether the yen will continue to slide, or will we see a correction and improvement by the Japanese currency against the US dollar.

The yen is showing a lot of volatility, as it continues to bounce in all directions. Will the dollar continue to hammer away at the hapless yen? With the markets expecting more easing measures, we could see the pair break above the 93 level.

USD/JPY Fundamentals

• 13:oo Japanese BOJ Governor Masaaki Shirakawa speaks to BOJ in Tokyo.
• 13:30 US FOMC Member Elizabeth Duke Speaks.
• 15:00 US ISM Non-Manufacturing PMI. Estimate 55.2 points.
• 15:00 US IBD/TIPP Economic Optimism. Estimate 46.1 points.

*Key releases are highlighted in bold

*All release times are GMT

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.