USD/JPY – Japanese Yen Trading Sideway, Shrugs Off Upbeat Minutes

The Japanese yen is showing little movement in the Monday session. In North American trade, USD/JPY is trading at 109.27, up 0.10% on the day. On the release front, the Bank of Japan released its minutes from the April policy meeting. Later in the day, Japan releases Household Spending, which is expected to rebound with a strong gain of 1.2%. There are no major US releases on the schedule. On Tuesday, the US releases PPI and JOLTS Job Openings. We’ll also hear from Federal Reserve Chair Jerome Powell, who will speak at an event in Zurich.

The Bank of Japan minutes from the March meeting were upbeat. The minutes said that the economy, as well as inflation, are likely to continue on an upward trend. The bank has long sought to reach an inflation target of around 2 percent, and if policymakers are correct and this goal is on its way to being achieved, the BoJ will be able to contemplate a reduction in its stimulus program, a move which could have a substantial impact on the yen. However, the cautious BoJ is likely to stick to current policy well into 2019, even if economic conditions improve and inflation moves closer to target.

In the US, job numbers were a mixed bag on Friday. Nonfarm payrolls rebounded with a gain of 164 thousand, although this fell short of the estimate of 190 thousand. Wage growth dropped from 0.3% to 0.1%, missing the estimate of 0.2 percent. There was some good news from the unemployment rate, which dropped to 3.9%, beating the estimate of 4.1%. The Fed will likely be pleased that nonfarm payrolls were not red hot, as they April report justifies its policy of gradual rate hikes.

All eyes will be on this week’s US CPI report

U.S Dollar Bulls Take Firm Control

USD/JPY Fundamentals

Sunday (May 6)

• 19:50 BoJ Monetary Policy Meeting Minutes

Monday (May 7)

• 8:25 US FOMC Member Raphael Bostic Speaks
• 14:00 US FOMC Member Thomas Barkin Speaks
• Tentative – US Loan Officer Survey
• 15:00 US Consumer Credit. Estimate 16.2B
• 19:30 Japanese Household Spending. Estimate 1.2%
• 23:45 Japanese 10-year Bond Auction

Tuesday (May 8)

• 3:15 Federal Reserve Chair Jerome Powell Speaks
• 8:30 US PPI. Estimate 0.2%
• 8:30 US Core PPI. Estimate 0.2%
• 10:00 US JOLTS Job Openings. Estimate 6.02M

*All release times are DST

*Key events are in bold

USD/JPY for Monday, May 7, 2018

USD/JPY May 7 at 10:45 DST

Open: 109.10 High: 109.40 Low: 108.75 Close: 109.21

USD/JPY Technical

USD/JPY has edged lower in the Asian and European sessions. The pair is steady in North American trade

• 108.89 was tested earlier in support
• 110.11 is the next resistance line

Further levels in both directions:

• Below: 108.89, 108.00, 107.29 and 106.64
• Above: 110.11, 111.22 and 112.06
• Current range: 108.89 to 110.11

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (60%). This is indicative of trader bias towards USD/JPY reversing directions and heading lower.

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.