USD/JPY – Japanese Yen Edges Higher, Investors Eye Current Account

The Japanese yen has posted slight gains in the Wednesday session, erasing the losses seen on Tuesday. In North American trade, USD/JPY is trading at 109.23, down 0.29% on the day. On the release front, there are no major indicators on the schedule. Japan’s current account surplus is expected to narrow to 1.66 trillion. On Thursday, the US releases unemployment claims.

The Japanese yen had a strong start to the week, gaining 1.0% on Monday. The safe-haven yen took advantage of the massive sell-off on global stock markets, as investors lost their risk appetite. The slide started on Friday, after strong strong US employment numbers on Friday, as nonfarm payrolls and wage growth reports beat their estimates. Investors shied away from the stock markets, concerned that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. US stock markets have rebounded on Tuesday, and the Asian and European stock markets have responded with gains on Wednesday. If the volatility continues on global stock markets, we can expect further movement from the yen.

The Japanese economy continues to pick up steam early in 2018, but the Bank of Japan continues to insist that it has no plans to raise interest rates in the near future. On Tuesday, BoJ Governor Haruhiko Kuroda reiterated this stance, saying that although economic conditions had improved, inflation levels were too low to justify reducing the stimulus program. Inflation is running at 1.0%, well below the BoJ target of just below 2%. Kuroda added that it would be “inappropriate” to raise the 10-year government bond yield target. Until inflation moves significantly higher, it’s a safe bet that the BoJ will not reduce stimulus or raise interest rates.

USD/JPY Fundamentals

Wednesday (February 7)

• 00:00 Japanese Leading Indicators. Estimate 108.1%. Actual 107.9%
• 8:30 US FOMC Member William Dudley Speaks
• 10:30 US Crude Oil Inventories. Estimate 3.2M
• 13:01 US 10-year Bond Auction
• 15:00 US Consumer Credit. Estimate 19.9B
• 17:20 US FOMC Member John Williams Speaks
• 18:50 Japanese Bank Lending. Estimate 2.4%
• 18:50 Japanese Current Account. Estimate 1.66T
• 18:50 Japanese 30-year Bond Auction

Thursday (February 8)

• 8:30 US Unemployment Claims. Estimate 236K

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, February 7, 2018

USD/JPY February 7 at 10:45 EDT

Open: 109.56 High: 109.72 Low: 108.92 Close: 109.24

USD/JPY Technical

USD/JPY edged lower in the Asian session. In European trade, the pair posted losses but then recovered. USD/JPY is flat in the North American session

• 109.11 was tested earlier in support and remains a weak line
• 110.10 is the next resistance line

Current range: 109.11 to 110.10

Further levels in both directions:

• Below: 109.11, 108.21 and 107.29
• Above: 110.10, 111.53, 112.57 and 113.39

OANDA’s Open Positions Ratios

USD/JPY ratio is showing movement towards long positions. Currently, long positions have a majority (68%), indicative of trader bias towards USD/JPY reversing directions and moving higher.

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.