USD/JPY – Dollar Crashes Through 100 Barrier

The US dollar has been flirting with the 100 level, and the dollar finally punched through and held on to its gains in Tuesday trading. In the European session, USD/JPY is trading around 100.30, its highest level since late July. In economic releases, Japanese Tertiary Industry Activity declined 0.4%, matching the forecast. As well, the BOJ released the minutes of its most recent policy meeting. Japanese BSI Manufacturing Index will be released later today. In the US, Tuesday’s highlight is JOLTS Job Openings.

The Bank of Japan released its minutes from its August policy meeting on Monday. The minutes show that BOJ policymakers are confident that the aggressive monetary stimulus program is succeeding in boosting the economy. The BOJ noted that wages and household incomes had increased, which was a positive sign for increased consumer spending. Although the economy is improving, the public debt continues to balloon. The government is considering a hike in the sales tax in 2014, in order to reduce the debt. Such a step will not be popular, but will be easier for the government to introduce if the economy is improving.

Over the weekend, Tokyo emerged as the winning bid for the 2020 Summer Olympics, a move that could boost the Japanese economy. Hosting one of the most prestigious international events should boost consumer and investor confidence and could increase economic activity. Some analysts are calling the Olympic bid victory the “fourth arrow” of Abenomics, joining the other three arrows of Prime Minister Abe’s economic platform – monetary easing, fiscal stimulus and reforms. Whether the Tokyo Olympics turns a profit is hard to gauge at this point in time, but the event will certainly be a boom for construction, with the Olympic Village alone expected to cost around 95 billion yen.

US releases ended last week on a disappointing note, as the all-important Non-Farm Payrolls came in at 169 thousand, missing the estimate of 178 thousand. The Unemployment Rate dropped from 7.4% to 7.3%, but this improvement is not all that significant, given the low participation rate in the labor force. The Fed continues to keep its cards away from prying market eyes, but we’re unlikely to see QE tapering without stronger employment numbers. Chicago Fed President Charles Evans hinted that we could see some action on this front from the Fed before the end of the year.

USD/JPY for Tuesday, September 10, 2013

USD/JPY September 10 at 12:20 GMT

USD/JPY 100.28 H: 100.38 L: 99.38

USD/JPY Technical

• USD/JPY has posted sharp gains in Tuesday trading. The pair barreled above the important 100 line early in the European session and continues to move upwards.
• On the downside, 100 is providing weak support. This is followed by support at 99.45.
• USD/JPY is facing resistance at 100.85. This is followed by resistance at 101.66. This line has remained intact since late May.
• Current range: 100 to 100.85

Further levels in both directions:

• Below: 100.00, 99.45, 98.43, 97.83, 97.18 and 96.20
• Above: 100.85, 101.66, 102.53 and 103.26

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing towards short positions in Tuesday trading. This is not reflected in the pair’s current movement, as the US dollar has posted strong gains on Tuesday. The ratio continues to have a strong majority of long positions, indicative of strong trader bias towards the dollar moving to higher ground.

USD/JPY has pushed into 100 territory. Will the pair continue to move upwards? With the US releasing an important employment indicator later in the day, we could see more movement from USD/JPY in today’s North American session.

USD/JPY Fundamentals

• 3:45 Japanese 30-year Bond Auction. Actual 1.80%.
• 6:00 Japanese Preliminary Machine Tool Orders. Actual -1.8%.
• 11:30 US NFIB Small Business Index. Estimate 94.8 points. Actual 94.0 points.
• 14:00 US JOLTS Openings. Actual 3.96M.
• 23:50 Japanese BSI Manufacturing Index. Estimate 7.2 points.
• 23:50 Japanese Corporate Goods Price Index. Estimate 2.3%.

*Key releases are highlighted in bold

*All release times are GMT

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