USD/JPY – Gains for Dollar Ahead of ADP Employment Data, Fed Minutes

USD/JPY has climbed above the 119 line on Wednesday, reversing the pair’s downward movement which has characterized the pair since the start of the week. The pair is currently trading in the mid-119 range. It’s a very light week for Japanese releases, and there are none on Wednesday. In the US, today’s key releases are the ADP Nonfarm Payrolls and Trade Balance. As well, the Federal Reserve will release the minutes of its last policy meeting.

The markets are keeping a close eye on the Federal Reserve minutes, which will be released later in the day. In its December policy statement, the Fed adjusted its language, saying it would be “patient” about raising rates, rather than its usual language of maintaining low rates for a “considerable time”. Now that the arduous QE journey has been completed, does the shift in language represent any change in monetary policy? The markets are hoping that the minutes can provide some clarity as to the timing of a rate hike.

In the US, the ISM Non-Manufacturing PMI, a key indicator, dropped sharply to 56.2 points in December, its lowest reading in six months. The index was well off the forecast of 58.2 points. On the manufacturing front, there was more bad news as Factory Orders posted a drop of 0.7%, marking a fourth straight decline. This was short of the forecast of -0.3%. This follows a disappointing Manufacturing PMI, which also missed  expectations. There was more bad news from the manufacturing front on Tuesday, as Factory Orders posted a drop of 0.7%, marking a fourth straight decline. This was short of the forecast of -0.3%.

USD/JPY for Wednesday, January 7, 2015

USD/JPY January 7 at 13:40 GMT

USD/JPY 119.33 H: 119.51 L: 118.66

USD/JPY Technical

• USD/JPY has posted modest gains in the Asian and European sessions.
• 118.69 is an immediate support level.
• 119.83 is a weak resistance line. Will the pair break through in the North American session?
• Current range: 118.69 to 119.83

Further levels in both directions:

• Below: 118.69, 117.94, 116.69 and 115.56
• Above: 119,83, 120.63, 121.39, 122.18 and 124.16

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Wednesday. This is consistent with the pair’s movement, as the yen has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar continuing to move upwards.

USD/JPY Fundamentals

• 13:15 US ADP Nonfarm Employment Change. Estimate 227K.
• 13:30 US Trade Balance. Estimate -42.3B.
• 15:30 US Crude Oil Inventories. Estimate 0.9M.
• 19:00 US FOMC Meeting Minutes.
• 23:30 FOMC Member Charles Evans Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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