USD/JPY – Little Movement After Low-Key Fed Minutes

The Japanese yen has edged higher on Thursday, as USD/JPY continues to trade in the mid-101 range. In the US, the Federal Reserve minutes were cautious in tone, eliciting little reaction from the markets. On Thursday, there are two key releases on the schedule – Unemployment Claims and Existing Home Sales. Over in Japan, Flash Manufacturing PM came in just shy of the 50-point level, with a reading of 49.9 points. The BOJ releases its monthly report later in the day.

The Federal Reserve minutes were released on Wednesday, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

There were no surprises from the Bank of Japan policy statement on Wednesday. The Bank noted that the economy continues to recover at a moderate pace, and said that monetary policy would not change. The BOJ has been purchasing 60-70 trillion yen/year in asset purchases, and this aggressive monetary stance has raised inflation and growth levels, but has severely hurt the yen, which continues to trade above the 100 level.

Japanese releases continue to point upwards, as manufacturing releases have been strong. Last week, Revised Industrial Production bounced back after a sharp decline, posting a gain of 0.7%. This beat the estimate of 0.4%. The good news continued on Monday as Core Machinery Orders soared 19.1%, crushing the estimate of 6.1%. This marked the sharpest gain we’ve seen since January 2010. If Japanese data continues to point upwards, the yen could post further gains against the US dollar.

USD/JPY for Thursday, May 22, 2014

USD/JPY May 22 at 11:35 GMT

USD/JPY 101.61 H: 101.76 L: 101.36

USD/JPY Technical

• USD/JPY is steady in Thursday trade.
• On the upside, 102.53 is providing strong resistance.
• 101.19 is a weak support line. The key level of 100.00 is stronger.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.97.
• Above: 102.53, 103.07, 104.17 and 105.70.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions in Thursday trading. This is not consistent with what we are seeing from the pair, which has edged higher. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar moving upwards.

USD/JPY is not showing much movement on Thursday. In the European session, the pair is steady.

USD/JPY Fundamentals

• 1:35 Japanese Flash Manufacturing PMI. Actual 49.9 points.
• 5:00 BOJ Monthly Report.
• 12:30 US Unemployment Claims. Estimate 312K.
• 13:45 US Flash Manufacturing PMI. Estimate 55.6 points.
• 14:00 US Existing Home Sales. Estimate 4.71M.
• 14:00 US CB Leading Index. Estimate 0.4%.
• 14:30 US Natural Gas Storage. Estimate 104B.

*Key releases are highlighted in bold

*All release times are GMT

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.