USD/JPY – Dollar Pushes Yen Close to 110 in Thin Holiday Trade

It’s a quiet start to the week for the Japanese yen. In Monday’s North American session, USD/JPY is trading at 109.36, down 0.04% on the day. In the Asian session, the pair touched a high of 109.86, close to the symbolic 110 level. On the release front, Japanese inflation was stronger than expected. The Services Producer Price Index posted a strong gain of 0.9% in April, well above the estimate of 0.5%. This marked the highest gain since September. Later in the day, Japan releases the unemployment rate, which is expected to remain pegged at 2.5% for a third straight month. U.S markets are closed for Memorial Day, so there are no U.S events on the schedule. On Tuesday, the US releases CB Consumer Confidence and Japan will publish retail sales. As well, BoJ Governor Haruhiko Kuroda will address a conference in Tokyo.

The drama and uncertainty continue to swirl around the upcoming summit between President Trump and North Korean leader Kim Jong-un, which may or may not take place on June 12 in Singapore. Just a few days ago, Trump sent a letter to Kim, saying that Trump was canceling the much-anticipated meeting. However, the response from Pyongyang was restrained, and the White House has sent a team to Singapore in case the summit is back on. Meanwhile, the leaders of South Korea and North Korea met on the weekend. That meeting was completely unexpected and raises hopes of a breakthrough in the long conflict between the two Koreas.

The Bank of Japan remains officially committed to continuing its radical easing policy and negative interest rates until inflation rises closer to the bank’s target of around 2 percent. At the same time, BoJ policymakers have been looking for ways to move away from radical easing, in part because ultra-low interest rates have hurt the profits of financial institutions. Last week, BoJ Governor Haruhiko Kuroda promised that the bank would be transparent with regard to an exit from its radical easing policy, but added that the markets shouldn’t hold their breath for any dramatic announcements. Kuroda said that the BoJ would “communicate specifics on how we plan to exit once inflation accelerates toward 2 percent, but reiterated that there would be no departure from policy until the inflation target was met. That goal remains elusive, as underscored by recent inflation indicators. Last week, both BoJ Core CPI and Tokyo Core CPI dropped to 0.5%, missing their estimates of 0.6 percent.

  Buckle in for an action-packed holiday-shortened week

  Japan PM Seeks to Convince Trump to Drop Auto Tariffs

USD/JPY Fundamentals

Sunday (May 27)

• 19:50 Japanese Services Producer Price Index. Estimate 0.5%. Actual 0.9%

Monday (May 28)

• 19:30 Japanese Unemployment Rate. Estimate 2.5%

Tuesday (May 29)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.5%
• 10:00 US CB Consumer Confidence. Estimate 128.2
• 19:50 Japanese Retail Sales. Estimate 0.9%
• 20:00 BoJ Governor Kuroda Speaks

*All release times are DST

*Key events are in bold

USD/JPY for Monday, May 28, 2018

USD/JPY May 28 at 10:40 DST

Open: 109.40 High: 109.83 Low: 109.24 Close: 109.36

USD/JPY Technical

USD/JPY edged lower in the Asian session. The pair was flat for most of the European session and is showing little movement in North American trade

• 108.89 is providing support
• 110.11 is the next resistance line

Further levels in both directions:

• Below: 108.89, 108.00 and 107.29
• Above: 110.11, 111.22, 112.06 and 113.39
• 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 (59%). This is indicative of trader bias towards USD/JPY reversing directions and moving downwards.

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.USD.JP