USD/JPY – Yen Shrugs Off Weak Manufacturing Data

The Japanese yen has posted modest gains on Wednesday, as the pair flirts with the 102 line. On the release front, Japanese manufacturing numbers continue to have a dismal week, as BSI Manufacturing Index tumbled to a three-year low. Later in the day, we’ll get a look at Core Machinery Orders. In the US, there are no major releases on Wednesday. Today’s highlight is Crude Oil Inventories.

There was more good news on the US employment front, as JOLTS Job Openings jumped to 4.46 million, up sharply from 4.01 million a month earlier. This easily beat the estimate of 4.04 million, and comes on the heels of a positive Nonfarm Payrolls last week. We’ll get a look at Unemployment Claims on Thursday, with the markets expecting a slight improvement compared to the previous release.

Japanese manufacturing numbers have not impressed in May. BSI Manufacturing Index slumped to -13.9 points, surprising the markets that had estimated a gain of +14.1 points. This was the worst showing since May 2011. Earlier in the week, Tertiary Industry Activity posted a decline of 5.4%, its worst showing in three years. Preliminary Machine Tool Orders dipped to 24.1%, its weakest performance in 2014. There was much better news earlier in the week, as Final GDP soared 1.6% in Q1, a huge improvement from the weak gain of 0.2% in Q4. Current Account also looked sharp, posting a surplus for the first time since September. These strong numbers have reinforced the BOJ’s contention that the improving economy will be able to weather the sales tax hike which took effect in April.

USD/JPY for Wednesday, June 11, 2014

USD/JPY June 11 at 10:20 GMT

USD/JPY 102.06 H: 102.39 L: 102.02

USD/JPY Technical

• USD/JPY has posted modest losses on Wednesday.
• On the upside, 102.53 is a weak resistance line. The next line is at 103.07, which has held firm since early April.
• 101.19 is providing strong support.
• 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 almost unchanged on Wednesday. This is not consistent with the movement of the pair, as the yen has posted gains. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar reversing directions and moving upwards.

USD/JPY is trading just above the 102 line. Will it drop into 101 territory? The pair has lost ground in the European session.

USD/JPY Fundamentals

• 14:30 US Crude Oil Inventories. Estimate -1.3M.
• 17:01 US 10-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate -132.8B.
• 23:50 Japanese Core Machinery Orders. Estimate -10.8%.

*All release times are GMT

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