USD/JPY – Yen Dips Despite Strong Japanese Mfg. PMI

The Japanese yen is lower in the Tuesday session. Currently, USD/JPY is trading at 113.60. On the release front, Japanese Flash Manufacturing PMI improved to 53.5, beating the estimate of 52.1. This marked a sixth consecutive month above the 50-point line, which separates expansion from contraction. Elsewhere, All Industries Activity came in at -0.3%, shy of the forecast of -0.2%. This ended a streak of five straight gains. There are no major events in the US today. On Wednesday, the Federal Reserve releases the minutes of the January policy meeting.

After Fed Chair Janet Yellen’s upbeat take on the US economy, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed’s 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, “bad for business”.

USD/JPY Fundamentals

Monday (February 20)

• 19:30 Japanese Flash Manufacturing PMI. Estimate 52.1. Actual 53.5
• 23:30 Japanese All Industries Activity. Estimate -0.2%. Actual -0.3%

Tuesday (February 21)

• 8:50 US FOMC Member Neel Kashkari Speech
• 9:45 US Flash Manufacturing PMI. Estimate 54.7
• 9:45 US Flash Services PMI. Estimate 55.8
• 12:00 US FOMC Member Patrick Harker Speech

Wednesday (February 22)

• 10:00 US Existing Home Sales. Estimate 5.55M
• 14:00 US FOMC Minutes

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, February 21, 2017

USD/JPY February 21 at 7:00 EST

Open: 113.27 High: 113.77 Low: 113.23 Close: 113.68

USD/JPY Technical

USD/JPY edged higher in the Asian session. The pair posted small losses in European trade but has recovered

• 112.57 is providing support
• 113.80 is under pressure in resistance. It could break during the Tuesday session
• Current range: 112.57 to 113.80

Further levels in both directions:

• Below: 112.57, 110.94 and 109.77
•  Above: 113.80, 114.83, 115.90 and 116.70

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Tuesday session. Currently, long positions have a majority (58%), indicative of trader bias towards USD/JPY continuing to move upwards.

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.