USD/JPY – Yen Shrugs Off Soft Japanese Data, Inflation Reports Next

The Japanese yen has ticked lower in the Thursday session. In North American trade, USD/JPY is trading at 111.79, down 0.12% on the day. On the release front, Japanese Preliminary Industrial Production slowed to 0.5%, well below the estimate of 1.9%. Japanese Housing Starts declined 4.8%, compared to the forecast of a 2.8% decline. Later in the day, Japan releases Tokyo Core CPI, with an estimate of 0.6%. In the US, unemployment claims edged lower to 238 thousand, below the estimate of 241 thousand. Personal Spending dropped to 0.3%, marking a 4-month low. Still, this beat the estimate of 0.2%.

Bank of Japan Governor Haruhiko Kuroda has insisted that the BoJ will not taper its massive stimulus program before inflation moves closer to the BoJ’s target of around 2 percent. However, the BoJ has recently sent out subtle hints that it could tweak stimulus by allowing long-term interest rates to move higher. With Japanese investors holding JPY 450 trillion overseas, any rise in interest rates could reverse the flow of investment, resulting in massive amount of funds being repatriated back to Japan. Such a move would have a profound effect on global markets and would likely boost the Japanese yen. Investors are keeping a close eye on the BoJ, as any hints regarding tapering stimulus or raising rates could trigger gains for the Japanese currency.

The US economy continues to perform well, and there was more good news on Wednesday, as Preliminary GDP for the third quarter posted a sharp gain of 3.3%. This was higher than the initial estimate of 3.0% and marked the fastest growth rate since Q3 of 2014. This was particularly impressive, as the southern US was battered by major hurricanes which caused significant economic damage. Consumer confidence levels are sky-high, but consumer consumption softened in the third quarter. However, business spending improved in the third quarter. Federal Reserve Chair Janet Yellen sounded upbeat about the economy, saying that the expansion was broad-based, across sectors of the economy.

USD/JPY Fundamentals

Wednesday (November 29)

• 18:50 Japanese Preliminary Industrial Production. Estimate 1.9%. Actual 0.5%

Thursday (November 30)

• 00:02 Japanese Housing Starts. Estimate -2.6%. Actual -4.8%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 238K
• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
• 8:30 US Personal Spending. Estimate 0.2%. Actual 0.3%
• 8:30 US Personal Income. Estimate 0.3%. Actual 0.4%
• 9:45 US Chicago PMI. Estimate 62.2. Actual 63.9
• 10:30 US Natural Gas Storage. Estimate -37B. Actual -33B
• 12:30 US FOMC Member Randal Quarles Speaks
• 13:00 US FOMC Member Robert Kaplan Speaks
• 18:30 Japanese Household Spending. Estimate -0.2%
• 18:30 Japanese National Core CPI. Estimate 0.8%
• 18:30 Japanese Tokyo Core CPI. Estimate 0.6%
• 18:30 Japanese Unemployment Rate. Estimate 2.8%
• 18:30 Japanese Capital  Spending. Estimate 3.3%
• 19:30 Japanese Final Manufacturing PMI. Estimate 53.8

Friday (December 1)

• 10:00 US ISM Manufacturing PMI. Estimate 58.4

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, November 30, 2017

USD/JPY November 30 at 10:45 EDT

Open: 111.93 High: 112.48 Low: 111.86 Close: 111.79

USD/JPY Technical

USD/JPY ticked higher in the Asian and European sessions. In North American trade, the pair has given up these gains and continues to head lower

• 111.53 is a weak support line
• 112.57 is the next resistance line

Current range: 111.53 to 112.57

Further levels in both directions:

• Below: 111.53, 110.10, 109.12 and 108.25
• Above: 112.57, 113.55 and 114.59

OANDA’s Open Positions Ratios

USD/JPY ratio is showing slight movement towards long positions. Currently, long positions have a majority (59%), indicative of trader bias towards USD/JPY breaking out and moving higher.

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.