USD/JPY – Japanese yen edges lower on Weak Trade Balance

The Japanese yen has inched lower in the Monday session. In the North American trade, USD/JPY is trading at 110.45, down 0.19% on the day. On the release front, Japan surprised the markets by posting a trade deficit, the first in three months. The reading of -0.30 trillion yen was well off the forecast of a surplus of 0.14 trillion yen. There are no major U.S indicators on the schedule. On Tuesday, the focus is on construction numbers, as the U.S releases building permits and housing starts. Japan will release the minutes of the May policy meeting.

Investor risk appetite has waned after U.S President Trump imposed further tariffs on some $50 billion of Chinese products. China has promised to retaliate against U.S imports, as trade ties between the world’s two largest economies continue to deteriorate. With the U.S recently slapping tariffs on the E.U and the NAFTA talks in pause mode, it is no wonder that investor anxiety has risen. If the trade war between the U.S and its partners continues to escalate, the Japanese economy, which relies heavily on exports, could weaken and drag down the Japanese yen.

There were no surprises at Thursday’s Bank of Japan policy meeting. Policymakers maintained interest rates at -0.10%. The bank also downgraded its inflation forecast to a range of between 0.5% and 1.0%, underscoring that the massive stimulus program has failed to raise inflation anywhere near the bank’s target of around 2 percent. The Bank of Japan has stubbornly held onto its inflation target, even though there is little chance that the target will be met anytime soon. The recent improvement in the economy has stirred some debate about tapering stimulus, but the cautious BoJ is unlikely to make any such moves in 2018.

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USD/JPY Fundamentals

Sunday (June 17)

• 19:50 Japanese Trade Balance. Estimate 0.14T. Actual -0.30T

Monday (June 18)

• 10:00 US NAHB Housing Market Index. Estimate 70. Actual 70
• 13:00 US FOMC Member Rafael Bostic Speaks
• 16:00 US FOMC Member John Williams Speaks

Tuesday (June 19)

• 8:30 US Building Permits. Estimate 1.35M
• 8:30 US Housing Starts. Estimate 1.31M
• 19:50 BoJ Monetary Policy Meeting Minutes

*All release times are DST

*Key events are in bold

USD/JPY for Monday, June 18, 2018

USD/JPY June 18 at 11:50 DST

Open: 110.66 High: 110.73 Low: 110.30 Close: 110.45

USD/JPY Technical

USD/JPY ticked lower in the Asian session. The pair was flat in the European session and this trend has continued in the North American session

• 110.21 is a weak support line
• 111.22 is the next resistance line

Further levels in both directions:

• Below: 110.21, 109.21 and 108.13
• Above: 111.22, 112.30 and 113.75
• Current range: 110.21 to 111.22

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