USD/JPY – Japanese Yen Edges Higher, Final GDP Next

The Japanese yen has posted modest gains in the Thursday session. In the North American session, USD/JPY is trading at 109.99, down 0.17% on the day. On the release front, Japanese Leading Indicators improved to 105.6%, matching the forecast. In the U.S, unemployment claims ticked up to 222 thousand, just below the estimate of 223 thousand. Later in the day Japan releases Final GDP and Current Account. The markets are braced for Final GDP to decline 0.1 percent. This would mark the first decline in over two years and if GDP does point to contraction, traders should expect the yen to lose ground. Japan’s current account surplus is expected to widen to JPY 2.10 trillion. On Friday, Japan publishes Economy Watchers Sentiment and the G7 leaders will meet in Quebec.

Japan finds itself in the enviable position of being on the sidelines in a simmering trade dispute, after the US slapped tariffs on steel imports from between the European Union, Canada and other countries. However, Japan has plenty to lose if the tit-for-tat tariff battle escalates, which could snowball into a full-blown global trade war. Last week, finance ministers from six members of the G-7 were united in their criticism of US Treasury Secretary Steve Mnuchin over the brewing trade war. The leaders of the G-7 are meeting on Friday in Quebec, and President Trump is likely to receive an earful about the tariffs from the six other members. The escalating trade battle is sure to dominate the summit, and if the leaders fail to resolve matters, it could spell bad news for the export-reliant Japanese economy, which has greatly benefited from a stronger global economy.

Japanese officials are keeping a close eye on the upcoming summit between US President Trump and North Korean President Kim Jong-un next week in Singapore. The meeting will mark the first ever face-to-face meeting between leaders of the U.S and North Korea. Trump has tried to lower expectations, saying the sides are unlikely to reach an agreement on North Korea relinquishing its nuclear weapons. Still, the fact that the two leaders are meeting is a sign that significant progress is being made in the long-standing dispute in the Korean peninsula. North Korean missiles represent a significant threat to Japan’s security, and Japanese Prime Minister Abe is expected to press Japan’s concerns when he meets with Trump ahead of the summit.

  USD can’t find a grip

  Dollar softer ahead of G7 Summit

USD/JPY Fundamentals

Thursday (June 7)

• 1:00 Japanese Leading Indicators. Estimate 105.6%. Actual 105.6%
• 8:30 US Unemployment Claims. Estimate 223K. Actual 222K
• Tentative – US IBD/TIPP Economic Optimism. Estimate 54.2
• 10:30 US Natural Gas Storage. Estimate 87B
• 15:00 US Consumer Credit. Estimate 13.9B
• 19:50 Japanese Bank Lending. Estimate 2.2%
• 19:50 Japanese Current Account. Estimate 2.10T
• 19:50 Japanese Final GDP Price Index. Estimate 0.5%
• 19:30 Japanese Final GDP. Estimate -0.1%

Friday (June 8)

• 1:00 Japanese Economy Watchers Sentiment. Estimate 49.4
• Day 1 – G7 Meetings

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, June 7, 2018

USD/JPY June 7 at 10:00 DST

Open: 110.18 High: 110.22 Low: 109.84 Close: 109.99

USD/JPY Technical

USD/JPY edged lower in the Asian session and has recovered some of the gains in European trade. The pair has ticked lower in North American trade

• 108.89 is providing support
• 110.11 remains fluid. Currently, it is a weak resistance line

Further levels in both directions:

• Below: 108.89, 108.00, 107.29 and 106.09
• Above: 110.11, 111.22 and 112.06
• Current range: 108.89 to 110.11

OANDA’s Open Positions Ratios

USD/JPY ratio continues to show little movement this week. Currently, long positions have a majority (60%), indicative of trader bias towards USD/JPY reversing directions and moving 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.