USD/JPY – Steady as Unemployment Claims Dip

The Japanese yen is flirting with the 110 line on Wednesday, as the Japanese currency remains under pressure. USD/JPY is currently at its highest level since August 2008, as the dollar is showing no signs of slowing down. September has not been kind to the yen, which has shed about 600 points against the greenback. There is only one event out of Japan, the 10-y Bond Auction. The yield was unchanged for a third straight month, at 0.52%. In the US, Unemployment Claims looked solid, dropping to 287 thousand, down from 293 thousand a month earlier.

Japan continues to release mixed data this week. The quarterly Tankan Indices, which are similar to the US PMIs, moved in opposite directions in September. The Tankan Manufacturing Index improved to 13 points, edging up from last month’s figure of 12 points. The Service Index also came in at 13 points, but this was down sharply from the previous reading of 19 points. On Monday Japanese Household Spending and Preliminary Industrial Production both posted declines. On a brighter note, Retail Sales gained 1.2%, its best showing in five months.

In the US, employment numbers are showing improvement. US Unemployment Claims dropped to 287 thousand, beating the estimate of 299 thousand. ADP Nonfarm Payrolls surprised with a strong gain, climbing to 213 thousand, compared to 204 thousand in the previous release. This beat the estimate of 207 thousand. The ADP release precedes the official NFP release, which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with a solid reading, the US dollar could post further gains against its major rivals.

On the manufacturing and housing fronts, this week’s US numbers were disappointing. ISM Manufacturing PMI fell to 56.6 points, down from 59.0 points a month earlier. US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. On Friday, we’ll get a look at ISM Non-Manufacturing PMI, with the markets braced for a softer reading for September.

USD/JPY for Thursday, October 2, 2014

USD/JPY October 2 at 12:55 GMT

USD/JPY 108.67 H: 109.08 L: 108.33

USD/JPY Technical

• USD/JPY moved lower in the Asian session but recovered. In the European session, the pair again moved downwards, briefly breaking below support at 108.58.
• On the downside, 108.58 is fluid and could see further action during the day. 107.68 is stronger.
• 109.82 is providing strong resistance.
• Current range: 108.58 to 109.82

Further levels in both directions:

• Below: 108.58, 107.68, 106.85 and 105.44
• Above: 109.82, 110.68, 112.48, 113.68 and 114.65

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Thursday, reversing the movement seen a day earlier. This is not consistent with the pair’s movement, as the yen has posted slight gains. The ratio has a majority of short positions, indicative of trader bias towards the yen continuing to move higher.

USD/JPY Fundamentals

• 3:45 Japanese 10-year Bond Auction. Actual 0.52%.
• 12:30 US Unemployment Claims. Estimate 299K. Actual 287K.
• 14:00 US Factory Orders. Estimate -9.4%.
• 14:30 US Natural Gas Storage. Estimate 107B.

*Key releases are highlighted in bold

*All release times are GMT

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