USD/JPY – Yen Listless After Japanese Holiday

The Japanese markets were off for a holiday on Tuesday, and there hasn’t been much activity to report on Wednesday, as USD/JPY trades quietly. In the European session, the pair is in the mid-108 range. On the release front, Japanese Flash Manufacturing PMI softened last month, coming in at 51.7 points. Later in the day, we’ll get a look at the Japanese Services Producer Price Index, which measures inflation in the corporate sector. The markets are expecting another strong reading, with an estimate of 3.7%. In the US, today’s highlight is New Home Sales. The markets are expecting the indicator to improve in the upcoming release.

US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. The markets are hoping for better news from New Home Sales, which will be released later on Wednesday. The indicator has been struggling lately, with the past two readings missing expectations. The markets are expecting a stronger reading for August, with an estimate of 432 thousand.

The US economy continues to grapple with weak inflation levels, as underscored by August releases. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first decline since October. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. Core PPI also softened in August. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

USD/JPY for Wednesday, September 24, 2014

USD/JPY September 24 at 9:25 GMT

USD/JPY 108.59 H: 108.77 L: 108.49

USD/JPY Technical

• USD/JPY edged lower early in the Asian session. The pair is listless in the European session.
• On the downside, 108.58 remains fluid. Will the pair break below this support level? 107.68 is stronger.
• 109.82 is a strong resistance line.
• Current range: 108.58 to 109.82

Further levels in both directions:

• Below: 108.58, 107.68, 106.85, 105.44 and 104.17
• Above: 109.82, 110.68, 112.48, 113.68 and 114.65

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged on Wednesday. This is consistent with the pair’s lack of movement. The ratio has a majority of short positions, indicative of trader bias towards the yen breaking out of range and moving to higher ground.

USD/JPY Fundamentals

• 1:35 Japanese Flash Manufacturing PMI. Estimate 52.5 points. Actual 51.7 points.
• 14:00 US New Home Sales. Estimate 432K.
• 14:30 US Crude Oil Inventories. Estimate 0.7M.
• 16:05 US FOMC Member Loretta Mester Speaks.
• 23:50 Japanese Services Producer Price Index. Estimate 3.7%.

*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.