USD/JPY – Rangebound Ahead of Unemployment Claims

USD/JPY is showing very little movement in Thursday trading, as the pair trades in the mid-101 range. On Wednesday, ADP Non-Farm Payrolls looked awful, falling to a three-month low. We could see some volatility later in the day, as the US releases the all-important Unemployment Claims. Today’s other key event is Trading Balance. In Japan, Thursday’s only release is the 30-year bond yield, which was slightly lower in January.

ADP Non-Farm Employment disappointed in the January reading, sliding to 175 thousand, compared to 238 thousand a month earlier. This was well shy of the estimate of 191 thousand. Is the ADP release a prelude to grim tidings from the official Non-Farm Payrolls report on Friday? If the NFP falters as well, the Fed could delay its next QE taper and the fallout from such a negative message could hurt the US dollar. The Federal Reserve has scaled down its bond-buying scheme with two tapers of $10 billion, reducing QE to $65 billion each month. The Fed would like to terminate the scheme by the end of 2014.

Also in the US, the ISM Non-Manufacturing PMI, a key event, improved in the January release. The index came in at 54.0 points, up from 53.0 a month earlier. This was slightly above the estimate of 53.6 points. US manufacturing numbers continue to slip, as the ISM Manufacturing PMI dropped sharply and sagged to a seven-month low.

USD/JPY for Thursday, February 6, 2014

USD/JPY February 6 at 12:40 GMT

USD/JPY 101.48 H: 101.66 L: 100.32

USD/JPY Technical

• USD/JPY is listless on Thursday, trading in the mid-101 range.
• The pair is facing resistance at 102.53. This line has some breathing room as the dollar has weakened. 103.30 is the next line of resistance.
• On the downside, 101.19 is under pressure and could be tested during the day. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Thursday trading, continuing the trend we have seen for most of the week. This is consistent with what we are seeing from the pair, which is rangebound. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar breaking out and moving to higher ground.

The yen is showing little movement in Thursday trading. With the US releasing Unemployment Claims later today, we could stronger movement from USD/JPY in the North American session.

USD/JPY Fundamentals

• 3:45 Japanese 30-year Bond Auction. Actual 1.59%.
• 12:30 US Challenger Job Cuts. Actual 11.6%.
• 13:30 US Trade Balance. Estimate -35.8B.
• 13:30 US Unemployment Claims. Estimate 337K.
• 13:30 US Preliminary Nonfarm Productivity. Estimate 2.8%.
• 13:30 US Preliminary Unit Labor Costs. Estimate -0.7%.
• 15:00 US FOMC Member Daniel Tarullo Speaks.
• 15:30 US Natural Gas Storage. Estimate -270B.

*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.