USD/JPY – Japanese Yen Ticks Lower, US Data Mixed

USD/JPY has shown little movement since late last week, and this trend has continued in the Wednesday session. In North American trade, USD/JPY is trading at 113.31, up 0.06%. On the release front, Japanese Housing Starts declined 0.4%, a much better reading than the forecast of -2.5%. Later in the day, Japan releases manufacturing and consumer spending reports. Preliminary Industrial Production is forecast to remain unchanged at 0.5%, while Retail Sales is expected to rebound with a strong gain of 1.1%.

In the U.S, key indicators were mixed on Wednesday. CB Consumer Confidence slowed to 122.2, well off the estimate of 128.2 points. Pending Home Sales posted a small gain of 0.2%, beating the estimate of -0.4%. Housing numbers continue to beat expectations. Last week, Housing Starts came in at 1.30 million, beating the forecast of 1.25 million. On Tuesday, New Home Sales sparkled, with a gain of 733 thousand. This easily beat the estimate of 654 thousand, and was the highest reading since September 2007. On Thursday, the US releases unemployment claims, which is expected to drop to 241 thousand.

Japan released consumer spending and inflation numbers on Monday, and the readings were strong. Tokyo Core CPI, the primary gauge of consumer inflation, climbed 0.9%, in December its strongest gain since March 2015. This edged above the forecast of 0.8%. National Core CPI improved to 0.9%, just above the estimate of 0.8%. There was more positive news as Household Spending rebounded with an excellent gain of 1.7%, crushing the estimate of 0.6%. This reading marked a 5-month high. Next up is another inflation indicator, BoJ Core Inflation. The Bank of Japan maintained monetary policy last week and the minutes of the October meeting indicated that most members favored a  continuation of the current ultra-accommodative policy. This could weigh on the yen, as other central banks, such as the ECB, the Federal Reserve and the Bank of Canada have tightened policy in recent months, widening divergence with the Bank of Japan.

USD/JPY Fundamentals

Wednesday (December 27)

• 00:00 Japanese Housing Starts. Estimate -2.5%. Actual -0.4%
• 10:00 US CB Consumer Confidence. Estimate 128.2. Actual 122.1
• 10:00 US Pending Home Sales. Estimate -0.4%. Actual 0.2%
• 18:50 BoJ Summary of Opinions
• 18:50 Japanese Preliminary Industrial Production. Estimate 0.5%
• 18:50 Japanese Retail Sales. Estimate 1.1%

Thursday (December 28)

• 00:00 Japanese BoJ Core CPI
• 8:30 US Unemployment Claims. Estimate 241K

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, December 27, 2017

USD/JPY December 27 at 10:10 EDT

Open: 113.23 High: 113.38 Low: 113.15 Close: 113.32

USD/JPY Technical

USD/JPY ticked higher in the Asian session but gave up these gains. The pair showed limited movement in European trade and has inched upwards in the North American session

• 112.57 is providing support
• 113.55 is the next resistance line

Current range: 112.57 to 113.55

Further levels in both directions:

• Below: 112.47, 111.53, 110.10 and 109.11
• Above: 113.55, 114.59 and 115.50

OANDA’s Open Positions Ratios

USD/JPY ratio is unchanged in the Wednesday session. Currently, long positions have a majority (53%), indicative of slight trader bias towards USD/JPY breaking out 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.