USD/JPY – Japanese yen edges higher, investors await Fed minutes

The Japanese yen has posted slight gains in Wednesday trade. In the North American session, the pair is trading at 112.04, down 0.20% on the day. On the release front, construction indicators missed the estimates. Building Permits ticked up to 1.24 million, shy of the estimate of 1.27 million. Housing Starts slipped to 1.20 million, missing the forecast of 1.22 million. Later in the day, the Federal Reserve releases the minutes of its September policy meeting. Japan will release Trade Balance, with the deficit expected to widen to JPY -0.34 trillion. On Thursday, the U.S publishes Philly Fed Manufacturing Index and unemployment claims. Japan will release National Core CPI.

Japanese officials are keeping a close eye on the US-China trade dispute, as the country’s export-reliant economy has much to lose if that conflict worsens. Japan is also under intense pressure to reduce its trade surplus with the U.S. Japan has a $69 billion trade surplus with the U.S, and President Trump is pressing for an agreement that will address that imbalance. Trump had threatened to slap 25% tariffs on Japanese auto exports, but has agreed to forego any tariffs while trade talks are underway between Japan and the United States.

In the U.S, retail sales posted a weak gain of 0.1% in September, compared to August. However, on an annualized basis, the picture remains bright, with retail sales gaining a strong 4.7 percent. The third quarter ended with strong consumer spending, buoyed by record low unemployment and the Trump administration’s massive tax cuts. However, the stimulus from the tax reform package may have run out of steam, which could mean lower consumer spending numbers in the fourth quarter.

Fed minutes eyed as markets recover

Asia market closing view: fumbling into the EU summit

USD/JPY Fundamentals

Wednesday (October 17)

• 8:30 US Building Permits. Estimate 1.28M. Actual 1.24M
• 8:30 US Housing Starts. Estimate 1.21M. Actual 1.20M
• 10:30 US Crude Oil Inventories
• 12:10 US FOMC Member Lael Brainard Speaks
• 19:50 Japanese Trade Balance. Estimate -0.34T
• 20:30 BoJ Governor Kuroda Speaks

Thursday (October 18)

• 8:30 US Philly Fed Manufacturing Index. Estimate 19.7
• 8:30 US Unemployment Claims. Estimate 211K
• 19:30 Japanese National Core CPI. Estimate 1.0%

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, October 17, 2018

USD/JPY October 17 at 10:45 DST

Open: 112.25 High: 112.42 Low: 112.02 Close: 112.03

USD/JPY Technical

In the Asian session, the pair ticked higher but then retracted. USD/JPY was flat in the Asian session and has edged lower in North American trade

• 111.20 is providing support
• 112.30 was tested earlier in resistance. It is a weak line

Further levels in both directions:

• Below: 111.20, 110.28 and 109.32
• Above: 112.30, 113.75, 114.73 and 115.51
• Current range: 111.20 to 112.30

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