USD/JPY – Yen Loses Ground As Industrial Data Declines

The Japanese yen has lost ground on Tuesday. In the European session, USD/JPY is trading in the high-0.98 range, as the key 100 level is within striking distance. The yen slipped following a disappointing Tertiary Industry Activity release, as the indicator posted its third decline in four releases. There are no US events on Tuesday.

Japanese releases continue to struggle this week, which is weighing on the yen. On Tuesday, Tertiary Industry Activity posted a decline of -0.2%, compared to a gain of 0.7% last month. This figure missed the estimate of 0.2% and was the third decline in four releases, pointing to weak spending by Japanese businesses. On Monday, Japanese Current Account, which is closely linked to currency demand, posted a deficit of 0.13 trillion yen, slightly larger than the estimate of -0.10 trillion. The weak figure is raising concerns since it marks the first decline since October 2012. We’ll get a look at Core Machinery Orders and Corporate Goods Price Index later on Tuesday.

The markets had very low expectations from Non-Farm Payrolls, one of the most important economic indicators. The estimate for the October release stood at just 121 thousand, as there was concern that the reading would be artificially low due to the government shutdown in October. However, the indicator put those concerns to rest, as the indicator soared to 204 thousand, its highest level in eight months. The outstanding NFP figure bolstered the US dollar against the major currencies, and has increased speculation that the Fed might press the tapering trigger in December. Such talk could bolster the US currency, as a reduction in QE is bullish for the dollar. At the same time, speculation about a scaling down in QE introduces some uncertainty and volatility in the currency markets.

USD/JPY for Tuesday, November 12, 2013

USD/JPY November 12 at 12:20 GMT

USD/JPY 99.73 H: 99.80 L: 97.15

USD/JPY Technical

• USD/JPY has posted strong gains on Tuesday as the pair pushes towards the 100 level.
• On the downside, 98.92 has reverted to a support role. The next support level is at 98.15.
• On the upside, the next resistance line is the key 100 level. This is followed by resistance at 101.19, which has held firm since mid-July.
• Current range: 98.92 to 100.00

Further levels in both directions:

• Below: 98.92, 98.15, 97.18, 96.00, 95.06 and 94.20
• Above: 100, 101.19, 102.53 and 103.30

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions, continuing the trend we saw on Monday. This is not reflected in the current movement of the pair, as USD/JPY is moving higher. The ratio continues to be dominated by long positions, indicative of a strong trader bias towards the US dollar posting further gains at the expense of the yen.

The pair has climbed to the high-99 range on Tuesday. Will it test the key 100 line? With no US releases on Tuesday, we could see USD/JPY continue to trade in the current range during the North American session.

USD/JPY Fundamentals

• 2:45 Japanese 30-year Bond Auction. Actual 1.62%.
• 4:00 Japanese Consumer Confidence. Estimate 46.3 points. Actual 41.2 points.
• 5:00 Japanese Preliminary Machine Tool Orders. Actual 8.4%.
• 23:50 Japanese Core Machinery Orders. Estimate -1.8%.
• 23:50 Japanese Corporate Goods Price Index. Estimate 2.5%.

*Key releases are highlighted in bold

*All release times are GMT

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