USD/JPY – Yen Stable as Tanken Indices Mixed

The Japanese yen is flirting with the 110 line on Wednesday, as the Japanese currency remains under pressure. USD/JPY is currently at its highest level since August 2008, as the dollar is showing no signs of slowing down. September has not been kind to the yen, which has shed about 600 points against the greenback. On the release front, there are two minor releases out of Japan. In the US, there are two key events on the schedule – ADP Non-Farm Employment Change and ISM Manufacturing PMI. The markets are not expecting significant changes from last month’s readings.

Japan continues to release mixed data this week. The quarterly Tankan Indices, which are similar to the US PMIs, moved in opposite directions in September. The Tankan Manufacturing Index improved to 13 points, edging up from last month’s figure of 12 points. The Service Index also came in at 13 points, but this was down sharply from the previous reading of 19 points. On Monday Japanese Household Spending and Preliminary Industrial Production both posted declines.  On a brighter note, Retail Sales gained 1.2%, its best showing in five months.

The markets are keeping a close eye upcoming US employment numbers, starting with ADP Nonfarm Payrolls later on Wednesday. The estimate stands at 207 thousand, little changed from 204 thousand. The ADP release precedes the official NFP release which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with better numbers this month, the US dollar could post further gains against its major rivals.

US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.

USD/JPY for Wednesday, October 1, 2014

USD/JPY October 1 at 12:20 GMT

USD/JPY 109.92 H: 110.08 L: 109.59

USD/JPY Technical

• USD/JPY moved higher in the Asian session, breaking past resistance at 109.82 and pushing above the 110 line. The pair was unable to consolidate and dipped below 110. The pair has been stable in European trade.
• 109.82 has reverted to a support role as the pair pushed higher. This line is fluid and could see further action during the day. 108.58 is stronger.
• 110.68 is the next line of resistance. Will the pair continue to move upwards and pressure this line?
• Current range: 109.82 to 110.68

Further levels in both directions:

• Below: 109.82, 108.58, 107.68, 106.85 and 105.44
• Above: 110.68, 112.48, 113.68, 114.65 and 116.66

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions on Wednesday, reversing the movement seen a day earlier. This is not consistent with the pair’s movement, as the dollar has posted slight gains. The ratio has a majority of short positions, indicative of trader bias towards the yen reversing its downward slide and moving higher.

USD/JPY Fundamentals

• 1:35 Japanese Final Manufacturing PMI. Estimate 51.7 points. Actual 51.7 points.
• 12:15 US ADP Nonfarm Employment Change. Estimate 207K.
• 13:45 US Final Manufacturing PMI. Estimate 58.0 points.
• 14:00 US ISM Manufacturing PMI. Estimate 58.6 points.
• 14:00 US Construction Spending. Estimate 0.5%.
• 14:00 US ISM Manufacturing Prices. Estimate 56.8 points.
• 14:30 US Crude Oil Inventories. Estimate 0.6M.
• All Day – US Total Vehicle Sales. Estimate 16.9M.
•  23:50 Japanese Monetary Base. Estimate 38.9%.

*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.