USD/JPY – Dollar Firm on Strong Unemployment Claims

The Japanese yen has posted slight losses on Thursday, as the pair trades in the mid-102 range early in the North American session. On the release front, US Unemployment claims beat the estimate, dropping to 289 thousand. In Japan, we’ll get a look at Current Account later in the day. The markets are expecting a small surplus in the July release. The BOJ will release a monetary policy statement early on Friday, with the central bank expected to maintain its current monetary policy.

US Unemployment Claims dipped back below the 300 thousand level last week. The key indicator dropped to 289 thousand, beating the estimate of 305 thousand. The four-week average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The stronger numbers point to increased hiring in response to stronger demand, which in turn has contributed to gains in income and stronger consumer spending. An improving job market is critical for economic growth, and the dollar has gained broad strength as key US data points upwards.

US PMIs have posted strong gains in the July readings. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news out of the US on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has resulted in gains for the US dollar against its major rivals.

USD/JPY for Thursday, August 7, 2014

USD/JPY August 7 at 13:55 GMT

USD/JPY 102.33 H: 102.46 L: 102.04

USD/JPY Technical

• USD/JPY touched a high of 102.46 late in the Asian session before edging lower. The pair has been steady in the European and North American sessions.
• 101.19 remains a strong support level.
• On the upside, 102.53 is under pressure. 103.07 follows.
• Current range: 101.19 to 102.053

Further levels in both directions:

• Below: 101.19, 100, 98.84 and 98.09
• Above: 102.53, 103.07, 104.17 and 105.7

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Thursday, continuing the direction seen a day earlier. This is consistent with the movement we’re seeing from the pair, as the dollar has posted gains. The ratio continues to have a majority of long positions, indicating trader bias towards the dollar continuing to post gains.

USD/JPY Fundamentals

• 12:30 US Unemployment Claims. Estimate 305K. Actual 289K.
• 14:30 US Natural Gas Storage. Estimate 89B.
• 19:00 US Consumer Credit. Estimate 18.3B.
• 23:50 Japanese Current Account. Estimate 0.11T.
• 23:50 Japanese Bank Lending.

* 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.