USD/JPY – Steady on Mixed US Numbers

The Japanese yen is stable on Monday, as USD/JPY is trading in the mid-102 range.  On Friday, US Nonfarm Payrolls came in at 209 thousand, well short of the estimate. There was better news from ISM Manufacturing PMI, which improved in July. In the US, today’s sole release is the Loan Officer Survey. There are no Japanese releases on Monday.

US employment numbers failed to impress last week. On Friday, Nonfarm Payrolls took a tumble, slipping to 209 thousand, compared to 288 thousand a month earlier. This was well below the estimate of 231 thousand and marked a four-month low. Earlier in the week, Unemployment Claims rose to 302 thousand, very close to the estimate of 303 thousand. There was positive news from the manufacturing sector, as US ISM Manufacturing PMI rose to 57.1 points, its best showing since November. As well, UoM Consumer Sentiment continues to look strong, coming in at 81.8 points. The index has not been below the 80-point level in 2014, pointing to strong consumer confidence.

Last week, the Federal Reserve released a policy statement, with the Fed sounding somewhat dovish in tone. Policymakers acknowledged lower unemployment levels, but noted that “there remains significant underutilization of labor resources” in the economy. The Fed statement reinforces the view that the US central bank is in no rush to raise interest rates after the termination of QE, which is expected in October. As well, the Fed said that inflation levels have moved somewhat closer to the Fed’s target of 2.0%. The Fed has remained vague as to when it will raise interest rates, but if the economy continues moving in the right direction, a rate increase is likely before mid-2105.

Japanese data struggled last week, as Housing Starts posted its fourth straight decline and Preliminary Industrial Production, tumbled 3.3% in June. This was the indicator’s sharpest decline since June 2013. There was no relief from Household Spending and Retail Sales, as both consumer spending indicators posted a third straight decline. These figures point to trouble in the economy, as a decrease in consumer spending will likely translate into weaker economic growth and put more pressure on the struggling Japanese yen.

USD/JPY for Monday, August 4, 2014

USD/JPY August 4 at 12:55 GMT

USD/JPY 102.58 H: 102.73 L: 102.48

USD/JPY Technical

• USD/JPY is showing little activity in the Asian session, touching a high of 102.73. The pair is almost unchanged in European trading.
• On the downside, 102.53 is under strong pressure and was breached in the Asian session. 101.19 is a stronger support level.
• 103.07 remains an immediate resistance line. 104.17 follows.
• Current range: 102.53 to 103.07

Further levels in both directions:

• Below: 102.53, 101.19, 100 and 99.57
• Above: 103.07, 104.17, 105.70, 106.55

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Monday. This is not consistent with the lack of movement we’re seeing from the pair. The ratio continues to have a majority of long positions, indicating strong trader bias towards the dollar breaking out and moving to higher ground.

USD/JPY Fundamentals

• Tentative – US Loan Officer Survey.

* 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.