USD/JPY – Dollar Under Pressure As Japanese Numbers Sparkle

The Japanese yen has edged higher, as USD/JPY trades below the 102 line on Friday. In economic news, Japanese releases looked sharp on Thursday, led by inflation and retail sale indicators. On Friday, Japanese Housing Starts, a minor event, fell short of the estimate. In the US, it’s a busy day, with  three key events – Preliminary GDP, Chicago PMI, and Pending Home Sales.

Japan released a host of indicators on Thursday, and the news was positive. Tokyo Core CPI continues to rise and posted a respectable gain of 0.9%, edging above the estimate. Household Spending climbed 1.1% while Retail Sales jumped 4.4%, as both easily beat their estimates. Not to be outdone, Preliminary Industrial Production shot up 4.0%, its best showing since May 2011. The yen has reacted mildly to these excellent numbers, as USD/JPY has dropped below the 102 line.

Federal Reserve Chair Janet Yellen testified on Thursday before a Senate committee. As expected, Yellen said that the Fed remains committed to tapering QE and would like to wind up the bond-buying scheme by the fall. At the same time, she acknowledged the string of weak US releases recently and said that the Fed would closely monitor to what extent the weak numbers are due to cold weather and what portion can be attributed to a “softer outlook”. The next Fed policy meeting takes place in mid-March and the markets will be expecting another $10 billion cut to QE.

Thursday was a mix for US key releases. Manufacturing data looked strong, as Core Durable Goods Orders jumped 1.1% in January. This surprised the markets, which had expected a decline of -0.1%. However, Unemployment Claims did not look as sharp, as the key indicator rose to 348 thousand, well above the estimate of 333 thousand. Meanwhile, a nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the housing indicator’s best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week. We’ll get another look at key housing data on Friday, with the release of  Pending Home Sales. The markets anticipate a strong gain after a miserable reading in December.

USD/JPY for Friday, February 28, 2014

USD/JPY February 28 at 10:50 GMT

USD/JPY 101.83 H: 102.14 L: 101.56

USD/JPY Technical

• USD/JPY has posted light losses in Friday trade. The pair dropped below the 102 line in the Asian session.
• 102.53 is the next resistance line. There is stronger resistance at 103.30.
• 101.19 is providing support. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Friday trading. This is not consistent with what we are seeing from the pair, as the yen has posted slight gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar pushing higher against the yen.

The yen has posted slight gains as USD/JPY is back below the 102 line.

USD/JPY Fundamentals

• 5:00 Japanese Housing Starts.. Estimate 12.3%. Actual 15.3%.
• 10:00 US FOMC Member Richard Fisher Speaks.
• 13:30 US Preliminary GDP. Exp. 2.6%.
• 13:30 US Preliminary GDP Price Index. Exp. 1.3%.
• 14:45 US Chicago PMI. Exp. 57.9 points.
• 14:55 US Revised UoM Consumer Sentiment. Exp. 81.4 points.
• 14:55 US Revised UoM Inflation Expectations.
• 15:00 US Pending Home Sales. Exp. 2.9%.
• 15:15 US FOMC Member Narayana Kocherlakota Speaks.
• 15:15 US FOMC Member Jeremy Stein Speaks.

*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.