USD/JPY – Limited Movement After Weak US Consumer Spending

The Japanese yen is almost unchanged on Tuesday. Early in the North American session, USD/JPY is trading in the mid-117 range. On the release front, the only event was the Japanese 10-year bond auction, which posted a gain of 0.31%. In the US, today’s highlight is Factory Orders. The markets are bracing for a sharp decline of 1.8%.

Japanese releases disappointed last Thursday. Tokyo Core CPI slipped for a sixth straight month, dropping to 2.2%. This matched the forecast. Household Spending continued to lose ground, posting a sharp decline of 3.4%. The markets had expected a decline of 2.3%. On the manufacturing front, Preliminary Industrial Production improved to 1.0%, but this was shy of the estimate of 1.3%.

US Advance GDP for Q4 disappointed, posting a gain of 2.6%. The markets had anticipated a gain of 3.0%. Still, market sentiment towards the US economy remains positive, underscored by the Federal Reserve statement last week, where the Fed noted solid growth in the economy. The Fed remains on track to raise rates later in 2015, and the dollar will likely benefit as speculation continues over the timing of a rate hike.

USD/JPY for Tuesday, February 3, 2015

USD/JPY February 3 at 14:15 GMT

USD/JPY 117.59 H: 117.74 L: 116.87

USD/JPY Technical

• USD/JPY has been marked by choppy trade during the day. The pair continues to test support at 117.49.
• 117.49 remains under pressure as a support level. 116.69 is stronger.
• 118.69 is a strong resistance line.
• Current range: 117.49 to 118.69

Further levels in both directions:

• Below: 117.49, 116.69, 115.56, 113.64 and 112.41
• Above: 118.69, 119.83, 120.63 and 121.69

OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in short positions on Tuesday. This is not consistent with the lack of movement we are seeing from the pair. The ratio currently has a majority of long positions, indicative of trader bias towards the US dollar moving to higher ground.

USD/JPY Fundamentals

• 3:45 Japanese 10-year Bond Auction. Actual 0.31%.
• 15:00 US Factory Orders. Estimate -1.8%.
• All Day – US Total Vehicle Sales. Estimate 17.0M.

*Key releases are highlighted in bold

*All release times are GMT

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