USD/JPY – Yen Climbs to Three-Month Highs on Strong Manufacturing Data

The Japanese yen has improved at the start of the new trading week, as USD/JPY trades slightly above the 101 line in the European session. This is the yen’s highest level since early February. On the release front, Japanese Core Machinery Orders jumped to a three-year high in April. There are no Japanese or US releases on Monday.

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 more gains against the retreating 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.

Although inflation numbers have not impressed, employment and manufacturing numbers looked sharp on Thursday. Unemployment Claims were outstanding, dropping to 297 thousand last week. This easily beat the estimate of 321 thousand and was the lowest level we’ve seen since May 2007. On the manufacturing front, the Philly Fed Manufacturing Index dipped to 15.4 points, but this was well above the estimate of 13.9 points. As well, Empire State Manufacturing Index climbed to 19.0 points, crushing the estimate of 5.5. This was the indicator’s best showing in two years.

USD/JPY for Monday, May 19, 2014

USD/JPY May 19 at 11:50 GMT

USD/JPY 101.20 H: 101.59 L: 101.10

USD/JPY Technical

• USD/JPY has posted gains in Monday trade.
• On the upside, 102.53 is providing strong resistance.
• 101.19 is under strong pressure. The key line 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 Monday trading. This is not consistent with what we are seeing from the pair, as the yen has posted strong gains. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar recovering and moving upwards.

USD/JPY has lost ground on Monday. In the North American session, the pair has edged lower.

USD/JPY Fundamentals

• There are no Japanese or US releases on Monday.

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.