USD/JPY – Yen Shows Gains As Crimea Crisis Continues

The Japanese yen has reversed directions on Tuesday, posting gains against the dollar. USD/JPY is trading in the mid-101 range.  The markets are following fast-moving events in the Ukraine, as Crimea has voted to join Russia and the EU and the US have responded with limited sanctions. In the US, there are two major events on the schedule – Core CPI and Building Permits. Today’s only Japanese release is Trade Balance.

Events are moving quickly in the Ukrainian crisis. Voters in Crimea voted overwhelmingly to join Russia in Sunday’s referendum, and Russian President Putin has recognized Crimea as an independent state, paving the way for annexation. Putin will address a special session of the Russian parliament on Tuesday. The EU and US have responded with targeted sanctions, freezing assets of several high-ranking Russian officials. Additional sanctions are expected, possibly as early as this week.

US releases looked weak on Friday. PPI posted a decline for the first time since November, coming in at -0.1%. The estimate stood at +0.2%. Preliminary UoM Consumer Sentiment dropped below the 80-point level for the first time since November, slipping to 79.9 points. This was short of the estimate of 81.9 points. The weak PPI points to persistently low inflation numbers, which is indicative of an underperforming economy. Recent US numbers have certainly not dazzled, but they should be strong enough for the Federal Reserve to go ahead with another taper of QE. This would be the third trim of the Fed’s asset-buying scheme, and would reduce QE to $55 billion per month. These tapers are dollar-positive and mark a vote of confidence in the US economy by the Federal Reserve.

No news was good news as far as the yen was concerned, as last week’s BOJ minutes contained no surprises. The central bank said that the economy and inflation is in line with the forecasts, and the April sales tax hike should not hurt economic growth. The Abe government is implementing the tax hike in a bid to tackle Japan’s massive national debt, and there are concerns that consumer spending could suffer, which could dampen the current recovery.

USD/JPY for Tuesday, March 18, 2014

USD/JPY March 18 at 11:45 GMT

USD/JPY 101.72 H: 101.94 L: 101.32

USD/JPY Technical

• The yen is higher on Tuesday. USD/JPY hit a high of 101.95 early in the Asian session.
• 102.53 continues in a resistance role. This is followed by a resistance line 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 has reversed directions on Tuesday, pointing to gains in short positions. This is consistent with the pair’s current movement, as the yen has gained ground. Long positions make up a majority of the open positions in the ratio, indicating trader bias towards the dollar changing directions and moving higher.

The yen has improved on Tuesday and is showing some movement in the European session.

USD/JPY Fundamentals

• 12:30 US Building Permits. Estimate 0.97M.
• 12:30 US Core CPI. Estimate 0.1%.
• 12:30 US CPI. Estimate 0.1%.
• 12:30 US Housing Starts. Estimate 0.92M.
• 13:00 US TIC Long-Term Purchases. Estimate 23.4B.
• 23:50 Japanese Trade Balance. Estimate -0.89T.

*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.