USD/JPY – Yen Hits 4-Month High, US Jobless Claims Jump

The Japanese yen has ticked lower in Thursday trading. In the North American session, USD/JPY is trading at the 111 line. On the release front, US unemployment claims jumped to 258 thousand, well above the forecast of 240 thousand. There was better news from New Home Sales, which improved to 592 thousand, compared to a forecast of 566 thousand. Later in the day, Japan will release Flash Manufacturing PMI. On Friday, the US will publish orders for durable goods.

The huge manufacturing sector has long been a sore point in the Japanese economy, but the picture has brightened. The Flash Manufacturing PMI, an important gauge of the sector, has indicated slight expansion for six straight months, and this positive trend is expected to continue in the March release. Global demand has been increasing, and a relatively weak Japanese currency has made Japanese goods more competitive on world markets. Bank of Japan Deputy Governor Kikuo Iwata spoke before a monetary policy committee earlier this week, and addressed the issue of a weak Japanese currency. Iwata noted that there were also negative aspects to a weak currency, and stated that the BoJ was aiming to bolster inflation through a rise in wages and productivity, rather than relying on a weak yen.

With the Fed pressing the rate trigger last week, what’s next for the U.S. central bank? The Fed’s rate statement and dot plot indicated that the Fed is looking at another two hikes in 2017, which would make three in total. This forecast was reiterated by Chicago Fed President Charles Evans earlier this week. Although one could make a strong case that three rate hikes in 2017 would be impressive, the markets appear disappointed, and would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach has soured sentiment towards the greenback, resulting in the dollar heading lower against its major rivals. The yen has climbed on the bandwagon, gaining 3.2 percent against the dollar since the Fed policy meeting last week.

USD/JPY Fundamentals

Thursday (March 23)

• 8:30 US Unemployment Claims. Estimate 240K. Actual 258K
• 8:45 US Fed Chair Janet Yellen Speech
• 10:00 US New Home Sales. Estimate 566K. Actual 592K
• 10:30 US Natural Gas Storage. Estimate -147B. Actual -150B
• 12:30 US FOMC Member Neel Kashkari Speech
• 19:00 US FOMC Member Robert Kaplan Speech
• 20:30 Japanese Flash Manufacturing PMI. Estimate 53.5 

Upcoming Key Events

Friday (March 24)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, March 23, 2017

USD/JPY March 23 at 13:20 EST

Open: 111.37 High: 111.58 Low: 110.62 Close: 110.96

USD/JPY Technical

USD/JPY was flat in the Asian session. The pair edged lower in European trade and continues to head lower in the North American session

• 110.94 is fluid. Currently it is a weak support line
• 112.57 is a strong resistance line
• Current range: 110.94 to 112.57

Further levels in both directions:

• Below: 110.94, 109.77, 108.54 and 107.49
•  Above: 112.57, 113.80 and 114.83

OANDA’s Open Positions Ratio

USD/JPY ratio is showing limited movement in the Wednesday session. Currently, long positions have a majority (62%). This is indicative of trader bias towards USD/JPY reversing directions and moving higher.

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.