USD/JPY – Continues to Pressure 94 Level

USD/JPY continues to trade at its highest levels since mid-2010, as the pair puts strong pressure on the 94 line. Market sentiment fell after the surprise announcement that BOJ Governor Masaaki Shirakawa would be stepping down earlier than expected from his position. Japanese Leading Indicators rose in January, but still fell below the market estimate. There was better news from Core Machinery Orders, which easily beat expectations. The markets will be keeping a close eye on today’s highlight, US Unemployment Claims.

The Japanese yen continues to struggle against the US dollar. The latest development, which took the markets by surprise, was the announcement that BOJ Governor Masaaki Shirakawa would be stepping down from his post on March 19, three weeks earlier than expected. Two deputy governors will also retire on the same day, and these key positions will likely be filled with officials who can be counted on to tow the line and follow the Japanese government’s aggressive easing policy. Japanese officials have consistently denied manipulating the value of the yen, which as plunged 12% in the past few months. However, Japan’s trading partners remain unconvinced, as they have watched Japan implement easing steps which have sent the yen tumbling. The weakening yen has made their goods less competitive in international markets, hurting exports. The value of the yen is likely to be a hot topic at the upcoming G20 meeting in Moscow. Meanwhile, the markets are bracing for more agressive easing, underscored by comments from BOJ board member Takehiro Sato, who stated that reaching the government’s target of two percent will be difficult without further action.

Looking at economic releases, Japanese Core Machinery Orders dropped to 2.8%, but this figure was much higher than what the markets had expected, as the forecast stood at -0.7%. Japanese Leading Indicators came in at 93.4%, which missed out on the estimate of 93.8%. In the US, Crude Oil Inventories, which tends to show significant fluctuations, dropped sharply to 2.6 million, just under the estimate of 2.7 million. The markets will be keeping a close eye on today’s Unemployment Claims. The previous reading was weaker than forecast, and the markets will be hoping for a turnaround from the key employment indicator.

USD/JPY for Thursday, February 7, 2013

USD/JPY February 7 at 11:00 GMT

 93.84 H: 93.92 L: 93.30

 USD/JPY Technical

USD/JPY continues to push to higher levels, and tested the 94 line earlier. The pair is facing weak resistance at 93.73, and this line could be breached at any time. This is followed by stronger resistance at 94.59. On the downside, there is support at 93.14. This line has strengthened as the pair trades close to the 94 line.

• Current range: 93.73 to 94.59.

Further levels in both directions:

• Below: 93.73, 93.14, 92.53, 91.94, 91.30, 91.94 and 90.91
• Above: 94.59, 95.27, 96.06 and 96.80.

OANDA’s Open Position Ratios

After displaying little activity, the USD/JPY ratio has leaped into action, showing strong very movement towards long positions. This is in line with what we have seen this week from the pair, as the dollar has posted sharp gains against the yen. Traders should note that most of the positions in the ratio are now long, and the bias is towards the yen continuing to lose ground. 

USD/JPY continues its upward trend and is testing the 94 line. With the markets expecting further easing steps in Japan, and the Japanese economy continuing to stumble, we could see the dollar post even more gains against the struggling yen.

USD/JPY Fundamentals

• 5:00 Japanese Leading Indicators. Estimate 93.8%. Actual 93.4%.
• 13:30 US Unemployment Claims. Estimate 361K.
• 13:30 US Preliminary Non-Farm Productivity. Estimate -1.3%.
• 14:30 US FOMC Member Jeremy Stein Speaks.
• 15:30 US Natural Gas Storage. Estimate -135B.
• 20:00 US Consumer Credit. Estimate 141.1B.

*Key releases are highlighted in bold

*All release times are GMT

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.