USD/JPY – Yen Dips as Xi Calms Trade War Concerns

USD/JPY has posted gains in the Tuesday session, erasing the losses seen on Monday. In the North American session, USD/JPY is trading at 107.16, up 0.37% on the day. On the release front, Japanese Preliminary Machine Tool Orders gained 28%, its weakest gain in eight months. Later in the day, Japanese releases Core Machinery Orders and PPI. In the US, inflation indicators beat the estimates. PPI edged up to 0.3%, beating the estimate of 0.1%. Core PPI also improved to 0.3%, edging above the estimate of 0.1%.

Investor risk appetite is up, but the safe-haven yen is lower after Chinese President Xi Jimping sent out a conciliatory message earlier on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Although China has previously declared that it would reduce the tariffs on vehicles, the markets were looking for some positive news, as the trade battle between the two largest economies in the world has shaken the markets in recent weeks. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.

US nonfarm payrolls, one of the most critical economic reports, was a major disappointment on Friday. The economy added just 103 thousand jobs, well off the forecast of 188 thousand. Still, the markets do not appear overly concerned, as payroll reports often sag in March. On a more positive note, wage growth improved to 0.3%, up from 0.1% a month earlier. This release matched the estimate. The improvement is likely to reinforce sentiment that the Fed could press the rate trigger four times in 2018, which could push the US dollar higher.

Xi Jinping Announces Plans to Further Open China’s Economy

USD/JPY Fundamentals

Tuesday (April 10)

• 1:57 Japanese Preliminary Machine Tool Orders. Actual 28.1%
• 6:00 US NFIB Small Business Index. Estimate 107.0. Actual 104.7
• 8:30 US PPI. Estimate 0.1%. Actual 0.3%
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
• 19:50 Japanese Bank Lending. Estimate 2.1%
• 19:50 Japanese Core Machinery Orders. Estimate -2.4%
• 19:50 Japanese PPI. Estimate 2.1%

Wednesday (April 11)

• 20:30 BoJ Governor Kuroda Speaks

*All release times are EST

*Key events are in bold

USD/JPY for Tuesday, April 10, 2018

USD/JPY April 10 at 11:10 EST

Open: 106.77 High: 107.25 Low: 106.62 Close: 107.17

USD/JPY Technical

USD/JPY edged higher in the Asian session. In European trade, the pair gave up ground but then recovered some of those losses. USD/JPY has edged upwards in the North American session

• 106.64 is providing support
• 107.29 is a weak resistance line

Further levels in both directions:

• Below: 106.64, 105.53, 104.32 and 103.09
• Above: 107.29, 108.00 and 108.89
• Current range: 106.64 to 107.29

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Tuesday session. Currently, showing long positions have a majority (68%), indicative of trader bias towards USD/JPY continuing to head to higher 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.