USD/JPY – Yen Unchanged, Markets Eye Current Account, GDP

USD/JPY continues to hug the 114 line in the Wednesday session. On the release front, the US releases JOLTS Job Openings, with the indicator expected to rise to 5.53 million. Japan will publish Current Account and Final GDP, with both indicators expected to improve. On Thursday, the US releases unemployment claims, with the indicator expected to rise to 272 thousand.

In Japan, consumer indicators started the week on a sour note, as Consumer Confidence dropped to 40.9, marking its lowest level since May. Last week, consumer spending indicators disappointed, as Household Spending and Retail Sales both posted declines. The Japanese yen is down sharply in November, dropping 8.0% against the strong US dollar. The greenback has enjoyed broad gains since the election of Donald Trump and the expected rate hike by the Federal Reserve this month has bolstered the dollar. However, the markets are expecting positive news from Japanese indicators on Wednesday. The current account surplus is expected to increase and the estimate for Final GDP stands at 0.6% for the third quarter.

The Federal Reserve will meet next week and the markets have priced a rate hike at 95 percent, most likely a quarter-point increase. This would mark the first hike by the Fed since last December, and sentiment towards the US dollar remains high. It will be interesting to see what happens early next year, with the Trump administration taking over in Washington. Trump has said he will increase government spending and cut taxes. This could lead to higher inflation levels, which means the Fed may need to adjust its outlook.

USD/JPY Fundamentals

Wednesday (December 7)

• 00:00 Japanese Leading Indicators. Estimate 101.6%. Actual 101.0%
• 10:00 US JOLTS Jobs Openings. Estimate 5.53M
• 10:30 US Crude Oil Inventories. Estimate -1.4M
• 15:00 US Consumer Credit. Estimate 17.5B
• 18:50 Japanese Current Account. Estimate 1.57T
• 18:50 Japanese Final GDP. Estimate 0.6%
• 18:50 Japanese Bank Lending. Estimate 2.4%
• 18:50 Japanese Final GDP Price Index. Estimate -0.1%
• 22:45 Japanese 30-year Bond Auction

Thursday (December 8)

• 8:30 US Unemployment Claims. Estimate 272K

*All release times are EST

*Key events are in bold

USD/JPY for Wednesday, December 7, 2016

USD/JPY December 7 at 7:50 EST

Open: 114.04 High: 114.40 Low: 113.87 Close: 114.02

USD/JPY Technical

• USD/JPY showed limited movement in the Asian session. In European trade, the pair posted small gains but then retracted
• 113.86 remains a weak support line
• 114.83 is the next line of resistance
• Current range: 113.86 to 114.83

Further levels in both directions:

• Below: 113.86, 112.48, 111.45 and 110.24
•  Above: 114.13, 115.45, 116.88 and 117.49

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in the Wednesday session. Currently, short positions have a strong majority (59%), indicative of trader bias towards USD/JPY breaking out and losing ground.

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.