USD/JPY – Higher As Markets Eye US Manufacturing Release

USD/JPY continues to move higher in Tuesday trading. In the European session, the pair has climbed across the 103 line. The dollar has recovered a large part of last week’s losses, having gained about 100 points since the start of the week. In economic news, Japanese Corporate Services Price Index posted a gain of 1.3%, beating the estimate. In the US, there are two key events on the schedule – Core Durable Goods Orders and CB Consumer Confidence. There are no Japanese releases on Tuesday.

The US housing sector continues to post worrying numbers. New Home Sales dropped sharply to 414 thousand, down from 464 thousand a month earlier. This was nowhere near the estimate of 457 thousand. This follows a disappointing Existing Home Sales release last week. The key indicator dropped to 4.87 million, down from 4.90 million a month earlier and shy of the estimate of the 4.94 million. This was the indicator’s fourth straight drop. The markets will be hoping for better news from Pending Home Sales on Thursday. A third straight housing reading below the estimate could weigh on the dollar.

There were no surprises in the minutes of the BOJ’s most recent policy meeting, which were released on Monday. The Bank said that it will continue to expand the monetary base by 60-70 trillion yen annually and that it will continue its monetary easing until the inflation target of 2.0% is reached. The Bank noted that the Japanese economy continues to recover at a moderate pace and that inflation has picked up. This was underscored by the Corporate Services Price Index, which continues to climb, posting a gain of 1.3%, above the estimate of 1.1%.  However, inflation still has a long way to go to meet the BOJ’s target, with inflation for 2013 below 1.0%.

USD/JPY for Tuesday, January 28, 2014

USD/JPY January 28 at 12:50 GMT

USD/JPY 103.08 H: 103.25 L: 102.53

USD/JPY Technical

• USD/JPY continues to post gains in Tuesday trading. The pair crossed above the 103 line earlier in the European session.
• 103.30 is the next resistance line. It has weakened as the dollar trades at higher levels. This is followed by resistance at 104.17.
• On the downside, 102.53 has some breathing room. The next support level is 101.19, which has remained intact since late November.
• Current range: 102.53 to 103.30

Further levels in both directions:

• Below: 102.53, 101.19, 100.00 and 99.57
• Above: 103.30, 104.17, 105.70, 106.85 and 107.73

OANDA’s Open Positions Ratio

USD/JPY ratio has reversed directions in Tuesday trading and is pointing to gains in short positions. This is not consistent with what we are seeing from the pair, as the US dollar continues to post gains. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar continuing to move to higher ground.

The dollar is pointing upwards and bounced back to 103 territory. We could see further movement from the pair in the North American session, as the US releases key manufacturing and consumer confidence numbers later in the day.

USD/JPY Fundamentals

• 13:30 US Core Durable Goods Orders. Estimate 0.7%.
• 13:30 US Durable Goods Orders. Estimate 1.9%.
• 14:00 US S&P/CS Composite-20 HPI. Estimate 13.7%.
• 15:00 US CB Consumer Confidence. Estimate 78.3 points.
• 15:00 US Richmond Manufacturing Index. Estimate 13 points.

*Key releases are highlighted in bold

*All release times are GMT

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