USD/JPY – Yen Hits 8-week High as US Durable Goods Decline

The yen has posted considerable gains in the Wednesday session. In North American trade, USD/JPY is trading at 111.64, down 0.71% on the day. The yen is at its highest level against the dollar since late September. Japanese banks are closed for a holiday, and there are no Japanese events on the schedule. In the US, durable goods reports were a mix. Core Durable Goods Orders gained 0.4%, matching the forecast. However, Durable Goods Orders declined 1.4%, well off the forecast of a 0.4% gain. The UoM Consumer Sentiment report came in at 98.5, above the forecast of 0.4%. Later in the day, the Federal Reserve releases the minutes of its November policy meeting.

The markets are keeping an eye on the Federal Reserve, which will release the November minutes later in the day. In October, the Fed announced that it would taper its balance sheet, and those reductions of $10 billion commenced around the time of the November meeting. The likelihood of upcoming rate hikes remains very high, with the odds for December and January hikes priced in at 91% and 89%, respectively. If the minutes reinforce the market perception that further rate hikes are just around the corner, the US dollar could gain ground.

US construction numbers continue to beat expectations. On Monday, it was the turn of Existing Home Sales, which climbed to a 4-month high. On Friday, Building Permits and Housing Starts impressed the markets. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Starts also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.

USD/JPY Fundamentals

Wednesday (November 22)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%. Actual 0.4%
• 8:30 US Unemployment Claims. Estimate 241K. Actual 239K
• 8:30 US Durable Goods Orders. Estimate 0.4%. Actual -1.2%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.2. Actual 98.5
• 10:00 US Revised UoM Inflation Expectations. Actual 2.5%
• 10:30 US Crude Oil Inventories. Estimate -1.4M
• 12:00 US Natural Gas Storage. Estimate -51B
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

USD/JPY for Wednesday, November 22, 2017

USD/JPY November 22 at 10:40 EDT

Open: 112.12 High: 112.72 Low: 111.57 Close: 111.64

USD/JPY Technical

USD/JPY edged lower in the Asian and European sessions. The pair continues to lose ground in the North American session

• 111.53 is providing weak support
• 112.57 is the next resistance line

Current range: 111.53 to 112.57

Further levels in both directions:

• Below: 111.53, 110.10 and 109.12
• Above: 112.57, 113.55, 114.59 and 115.50

OANDA’s Open Positions Ratios

USD/JPY ratio is showing little movement in the Wednesday session. Currently, long and short positions are almost an even split, indicative of a lack of trader bias as to what direction the pair will take next.

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.