USD/JPY – Yen Holds Own As Retail Sales Tumbles

The Japanese yen is stable on Thursday, as USD/JPY trades in the high-101 range early in the North American session. On the release front, it’s a busy day in both Japan and the US. Japanese Retail Sales slumped in April, posting its sharpest decline in three years. Later in the day, we’ll get a look at Household Spending, Tokyo Core CPI and Preliminary Industrial Production. In the US, Unemployment Claims dropped sharply, while Preliminary GDP posted a rare decline. We’ll get a look at Pending Home Sales later on Thursday.

Japanese Retail Sales is the primary gauge of consumer spending, and the indicator had an awful April, posting a decline of 4.4%. This was worse than the estimate of -3.2%, and marked the sharpest decline we’ve seen since April 2011. Meanwhile, the BOJ minutes pointed to some dissension on Monday, as policymakers were not in agreement as to growth and inflation forecasts. There was also a suggestion set a timeframe for monetary easing, but this was rejected by the majority. The BOJ has been purchasing 60-70 trillion yen/year in asset purchases, and this aggressive monetary stance has raised inflation and growth levels, but has severely hurt the yen, which continues to trade at high levels.

Thursday’s key releases out of the US have been a mix. Unemployment Claims bounced back in convincing fashion, as the indicator dropped to 300 thousand, well below the estimate of 321 thousand. Preliminary GDP came in at  -1.0% in Q1, lower than the estimate of -0.6%. This is a worrisome figure, as it marked the first contraction in Preliminary GDP since Q2 of 2009. The markets will be hoping for better news from Pending Home Sales.

USD/JPY for Thursday, May 29, 2014

USD/JPY May 29 at 13:25 GMT

USD/JPY 101.72 H: 102.78 L: 101.46

USD/JPY Technical

• On the upside, 102.53 continues to provide resistance. 103.07 is stronger.
• 101.19 is providing support. The key level of 100.00 is stronger.
• 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 and 105.70.

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Thursday trading. This is consistent with what we are seeing from the pair, as the yen has been unable to show any momentum. The ratio is made up of a majority of long positions, indicating trader bias towards the dollar breaking out and moving upwards.

USD/JPY is showing little movement on Thursday. The pair is steady early in the North American session.

USD/JPY Fundamentals

• 12:30 US Preliminary GDP. Estimate -0.6%. Actual -1.0%.
• 12:30 US Unemployment Claims. Estimate 321K. Actual 300K.
• 12:30 US Preliminary GDP Price Index. Estimate 1.3%. Actual 1.3%.
• 14:00 US Pending Home Sales. Estimate 1.1%.
• 14:30 US Natural Gas Storage. Estimate 110B.
• 15:00 US Crude Oil Inventories. Estimate -0.1M.
• 23:30 Japanese Household Spending. Estimate -3.4%.
• 23:30 Japanese Tokyo Core CPI. Estimate 2.9%.
• 23:30 Japanese National Core CPI. Estimate 3.1%.
• 23:30 Japanese Unemployment Rate. Estimate 3.6%.
• 23:50 Japanese Preliminary Industrial Production. Estimate -1.9%.

*Key releases are highlighted in bold

*All release times are GMT

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.