USD/JPY – Stable After Pushing Across 102

The Japanese yen is steady on Tuesday, as the pair trades above the 102 line. On the release front, Japanese Average Cash Earnings posted its sharpest gain in two years, indicative of increased consumer spending. In the US, it’s a quiet schedule, highlighted by Factory Orders.

Japanese releases continue to look good this weak. Japanese Average Cash Earnings, an important indicator of consumer spending, posted a gain of 0.9%, its best showing since April 2012. Analysts are paying close attention to consumer spending and confidence indicators, as there have been concerns that consumers would tighten up on the purse strings following a sales tax hike in April, which would be bad news for the recovering Japanese economy. On Monday, Capital Spending posted its strongest gains in almost two years, with a gain of 7.4% in Q1. This easily beat the estimate of 5.7%.

It’s not often that a key indicator drops and magically recovers a day later. However, this was the case with ISM Manufacturing PMI. The well-respected ISM Business Survey Committee reported on Monday that the key index had softened in May, but has since corrected its reading. The index actually improved to 55.4 points in May, up from 54.9 points a month earlier. As well, Final Manufacturing PMI and ISM Manufacturing Prices improved. This points to an expanding manufacturing sector, which is good news for the recovery. The markets will be hoping for more good news from today’s highlight, Factory Orders.

USD/JPY for Tuesday, June 3, 2014

USD/JPY June 3 at 11:35 GMT

USD/JPY 102.33 H: 102.45 L: 102.27

USD/JPY Technical

• USD/JPY has edged lower on Tuesday.
• 102.53 continues to provide weak resistance. The next resistance line is at 103.07, which has held firm since early April.
• 101.19 is providing 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 and 105.70.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in short positions in Tuesday trading, continuing the trend we’ve seen since Friday. This is consistent with the pair’s current movement, as the yen has edged higher. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar moving upwards.

USD/JPY continues to trade above the 102 line. The yen is unchanged in the European session.

USD/JPY Fundamentals

• 1:30 Japanese Average Cash Earnings. 0.6%. Actual 0.9%.
• 3:45 Japanese 10-year Bond Auction. Actual 0.61%.
• 14:00 US Factory Orders. Estimate 0.6%.
• 14:00 IBD/TIPP Economic Optimism. Estimate 46.5 points.
• All Day – US Total Vehicle Sales. Estimate 16.0M.

*Key releases are highlighted in bold

*All release times are GMT

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