USD/JPY – Little Movement As Unemployment Claims Jump

USD/JPY is steady on Thursday, as the pair trades in the mid-102 range late in the European session. On the release front, US Unemployment Claims was weak, as the indicator jumped to a nine-week high. Federal Reserve chair Janet Yellen addresses a bank conference in Washington and ISM Manufacturing PMI will be released. In Japan, we’ll get a look at Household Spending, an important consumer spending indicator. The markets are expecting a strong gain, following a poor reading in the previous release.

US Unemployment Claims failed to impress on Thursday, as the key indicator jumped to 344 thousand, well above the estimate of 317 thousand. It marked a nine-week high, and comes just a day before Nonfarm Payrolls is released. If the latter follows suit with a weak reading, we could see the dollar take a hit.

The ADP Nonfarm Payrolls were released on Wednesday, ahead of the critical official NFPs later in the week. The news was positive, as the indicator jumped to 220 thousand, marking a four-month low. This easily beat the estimate of 203 thousand. Advance GDP couldn’t keep pace, as the key indicator’s upward swing came to a crashing halt, with a Q1 gain of just 0.1%, compared to a 3.2% reading in Q4. This was well off the estimate of 1.2%. Is the US economy stalling? The weak reading could be a result of a harsh winter, but this will be of little consolation to the markets, and the dollar could lose ground against its major rivals.

As expected, the Federal Reserve trimmed its QE program by $10 billion on Wednesday. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.

In Japan, the BOJ sounded upbeat in its policy statement on Wednesday, stating that the economy would be able to weather any negative fallout from the hike in the sales tax in April. The policy statement stated that the current monetary base would continue and said that it expects to meet its inflation target in 2015. The BOJ’s target for inflation is 2% and inflation indicators have been steadily improving. The hike in the sales tax will increase government revenue, but there are concerns that consumer spending could take a hit and cause a downturn in the fragile economy.

USD/JPY for Thursday, May 1, 2014

USD/JPY May 1 at 13:05 GMT

USD/JPY 102.31 H: 102.34 L: 102.13

USD/JPY Technical

• USD/JPY has edged higher in Thursday trade. The pair touched a low of 102.15 early in the European session.
• 102.53 is a weak resistance line. 103.07 is stronger.
• 101.19 continues to provide strong support.
• 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, 105.70 and 106.85.

OANDA’s Open Positions Ratio

USD/JPY ratio is showing little change in Thursday trade. This is consistent with the lack of any significant movement from the pair. The ratio is made up of a substantial majority of long positions, indicating trader bias towards the dollar moving upwards.

The pair has had an uneventful day. In the North American session, the dollar has edged higher.

USD/JPY Fundamentals

• 11:30 US Challenger Job Cuts. Actual 5.7%.
• 12:30 US Fed Chair Janet Yellen Speaks.
• 12:30 US Unemployment Claims. Estimate 317K. Actual 344K.
• 12:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.2%.
• 12:30 US Personal Spending. Estimate 0.7%. Actual 0.9%.
• 12:30 US Personal Income. Estimate 0.4%. Actual 0.5%.
• 13:45 US Final Manufacturing PMI. Estimate 55.8 points.
• 14:00 US ISM Manufacturing PMI. Estimate 54.3 points.
• 14:00 US Construction Spending. Estimate 0.5%.
• 14:00 US ISM Manufacturing Prices. Estimate 59.4 points.
• 14:30 US Natural Gas Storage. Estimate 75B.
• All Day – US Total Vehicle Sales. Estimate 16.2M.
• 23:30 Japanese Household Spending. Estimate 1.7%.
• 23:30 Japanese Unemployment Rate. Estimate 3.6%.
• 23:50 Japanese Monetary Base. Estimate 55.3%.

*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.