Yen Remains Subdued as Markets Search for Cues

USD/JPY is showing little movement in the Monday session, continuing the trend which as marked the pair since last week. In the North American session, the pair is trading at 112.80. There are no major releases to start off the week. Japanese Consumer Confidence dipped to 43.2, shy of the estimate of 44.3 points.

The yen continued to lose ground last week, as the dollar touched a high of 113.05, its highest level in seven weeks. A weaker yen should result in a boost to the export sector, but on Saturday, BoJ Governor Haruhiko Kuroda said that this was not the case for Japan, since many Japanese companies were producing goods overseas. This argument may ring hollow with US president Trump and US exporters, who will likely cry foul if the the yen continues to lose ground. Early in his presidency, Trump accused Japan of manipulating the yen in order to gain a trade advantage over the US. The two sides have since agreed to let their foreign ministers handles issues related to currency matters.

US employment numbers were generally strong on Friday. Nonfarm Payrolls improved to 211 thousand, easily beating the forecast of 194 thousand. The unemployment rate fell to an impressive 4.4%, compared to the estimate of 4.6%. This was the lowest rate since May 2007. The news was not as positive from wage growth remained weak at 0.3%, matching the forecast. Still, with such little slack in the labor markets, we should see wage growth start to move higher. If that happens sooner rather than later, the Fed will have to reconsider a third rate hike in 2017. As things stand now, two more moves is the likely scenario. The positive job numbers have cemented a rate hike in June, as the odds of hike are up to 83%, according to the CME Group.

USD/JPY Fundamentals

Monday (May 8)

• 1:00 Estimate 44.3 Actual 43.2
• Tentative US Labor Market Conditions Index
• Tentative – US Loan Officer Survey
• 20:00 Japanese Average Cash Earnings. Estimate 0.4%
• 23:45 Japanese 10-y Bond Auction

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, May 8, 2017

USD/JPY May 8 at 10:30 EST

Open: 112.66 High: 112.88 Low: 112.38 Close: 112.80

USD/JPY Technical

USD/JPY has shown little movement in the Monday session

• 112.57 was tested in support earlier in the day and is a weak line
• 113.55 is the next resistance line
• Current range: 112.57 to 113.55

Further levels in both directions:

• Below: 112.57, 110.94 and 109.77 and 108.54
•  Above: 113.55, 114.96 and 115.90

OANDA’s Open Positions Ratio

In the Monday session, USD/JPY ratio is close to an even split of long and short positions. This is indicative of a lack of trader bias as to what direction the USD/JPY takes next.

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.