USD/JPY – Yen Flirts With 102 As Corporate Inflation Soars

The Japanese yen is steady on Tuesday, as USD/JPY trades just shy of the 102 line late in the European session. There was good news out of Japan as Corporate Services Price Index jumped sharply in April. In the US, the markets are back to work after the Memorial Day long weekend. We’ll get a look at two key events later in the day – Core Durable Goods Orders and CB Consumer Confidence. There are no Japanese releases on Tuesday.

Inflation indicators continue to point upwards in Japan, and the markets had expected a huge surge from Corporate Services Price Index in April, with an estimate of 3.3%. The index delivered the goods, posting a surge of 3.4%. Meanwhile, the BOJ minutes pointed to some dissension on Monday, as policymakers were not in agreement as to growth and inflation forecasts. There was also a suggestion set a timeframe for monetary easing, but this was rejected by the majority. The BOJ has been purchasing 60-70 trillion yen/year in asset purchases, and this aggressive monetary stance has raised inflation and growth levels, but has severely hurt the yen, which continues to trade at high levels.

US employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Elsewhere, key housing data was a mix, as Existing Home Sales fell short of expectations, while New Home Sales improved sharply in April and easily beat the estimate.

USD/JPY for Tuesday, May 27, 2014

USD/JPY May 27 at 12:00 GMT

USD/JPY 101.90 H: 101.99 L: 101.73

USD/JPY Technical

• USD/JPY is trading close to the 102 line. The pair touched a high of 101.99 late in the Asian session.
• On the upside, 102.53 continues to provide resistance. 103.07 is stronger.
• 101.19 is providing support. The key level of 100.00 is stronger.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.97.
• Above: 102.53, 103.07, 104.17 and 105.70.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions in Tuesday trading, continuing the trend we have seen since the start of the week. This is not consistent with what we are seeing from the pair, as the yen has showed little movement. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar breaking out and moving upwards.

USD/JPY is trading close to the 102 line on Tuesday. The pair has edged upwards in the European session.

USD/JPY Fundamentals

• 12:30 US Core Durable Goods Orders. Estimate 0.2%.
• 12:30 US Durable Goods Orders. Estimate -0.5%.
• 13:00 US S&P/CS Composite-20 HPI. Estimate 11.9%.
• 13:00 US HPI. Estimate 0.5%.
• 13:45 US Flash Services PMI. Estimate 55.6 points.
• 14:00 US CB Consumer Confidence. Estimate 83.2 points.
• 14:00 US Richmond Manufacturing Index. Estimate 5 points.

*Key releases are highlighted in bold

*All release times are GMT

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