USD/JPY – Steady Ahead of BOJ Policy Statement

The Japanese yen is showing little movement on Tuesday, as USD/JPY trades in the mid-101 range in the European session. On the release front, Japanese data continues to point upwards. All Industries Activity bounced back in April, posting a strong gain of 1.5%. Later in the day, we’ll get a look at Trade Balance. In the US, it’s another quiet day in the US, with no economic releases on Tuesday. The markets are keeping a close eye on the Federal Reserve minutes, which will be released on Wednesday.

The Bank of Japan releases a policy statement on Wednesday, and the central bank is expected to give a thumbs-up to the improving economy, which will likely mean that there are no plans to expand monetary stimulus. The BOJ has been increasing money base by 60-70 trillion yen each year through asset purchases, and no change is expected.

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 gains against the US dollar.

In the US, last week ended with encouraging housing numbers. Building Permits jumped to 1.08 million, well above the estimate of 1.01 million. This was the highest level we’ve seen since December 2006. Housing Starts continues to move higher and climbed to 1.07M, compared to the estimate of 0.98M. This marked a five-month high. Meanwhile, UoM Consumer Sentiment dipped to 81.8 points, short of the estimate of 84.7 points.

USD/JPY for Tuesday, May 20, 2014

USD/JPY May 20 at 12:45 GMT

USD/JPY 101.39 H: 101.59 L: 101.25

USD/JPY Technical

• USD/JPY is steady in Tuesday trade.
• On the upside, 102.53 is providing strong resistance.
• 101.19 remains under strong pressure. The key level of 100.00 follows.
• 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 almost unchanged in Tuesday trading, continuing the trend we saw at the start of the week. This is consistent with what we are seeing from the pair, which is showing little movement. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar moving upwards.

USD/JPY is steady on Tuesday. In the European session, the pair has edged higher.

USD/JPY Fundamentals

• 4:30 Japanese All Industries Activity. Estimate 1.6%. Actual 1.5%.
• 16:30 FOMC Member Charles Plesser Speaks.
• 17:00 FOMC Member William Dudley Speaks.
• 23:50 Japanese Trade Balance. Estimate -0.60T.

*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.