USD/JPY – Yen in Holding Pattern Ahead of Japanese GDP

USD/JPY continues to hug the 114 line this week. Currently, the pair is trading at 113.90. In economic news, Japanese BoJ Core CPI edged up to 0.2%. The markets are keeping a close eye on Japanese Final GDP for the fourth quarter, with an estimate of 0.4%. Preliminary GDP came in at 0.2%. If GDP is revised upwards, the yen could gain ground. In the US, today’s highlight is Trade Balance, with an expected deficit of 47.0 billion. On Wednesday, the US releases ADP Nonfarm Employment Change, ahead of the official Nonfarm Payrolls report on Friday.

Donald Trump continues to create controversy on an almost basis, much to the consternation of the markets. Still, the dollar remains strong, buoyed by a strong economy and the increasing likelihood of a rate hike at the upcoming Fed policy meeting on March 15. The likelihood of a March hike has jumped to 84%, according to the CME group, compared to 33% just a week ago. Why the huge jump in odds? One reason is that Fed policymakers have sent out strong hints that the Fed is leaning towards raising rates next week. Earlier in the year, the Fed sent out signals Fed sent out signals that it would stay on the sidelines until it had a clearer picture of Trump’s economic agenda, such as an outline of tax reform or fiscal spending plans. That has changed, as the Fed appears poised to move ahead despite the lack of any details about the administration’s economic policy. This week’s job numbers will be critically important, as strong numbers will likely boost the odds of a March move as well as push the greenback to higher levels.

Are Red Flags Appearing in the USD Rally?

USD/JPY Fundamentals

Upcoming Key Events

Tuesday (March 7)

• 00:00 Japanese BoJ Core CPI. Actual 0.2%
• 8:30 US Trade Balance. Estimate -47.0B
• 10:00 US IBD/TIPP Economic Optimism. Estimate 57.1
• 15:00 US Consumer Credit. Estimate 19.1B
• 18:50 Japanese Final GDP. Estimate 0.4%
• 18:50 Japanese Bank Lending
• 18:50 Japanese Current Account. 1.46T
• 18:50 Japanese Final GDP Price Index.  Estimate -0.1%

Wednesday (March 8)

• 00:00 Japanese Economy Watchers Sentiment. Estimate 49.9
• 00:00 Japanese Leading Indicators. Estimate 105.4%
• 8:15 US ADP Nonfarm Employment Change. Estimate 184K

*All release times are GMT

*Key events are in bold

USD/JPY for Tuesday, March 7, 2017

USD/JPY March 6 at 6:55 EST

Open: 113.90 High: 114.07 Low: 113.72 Close: 113.92

USD/JPY Technical

USD/JPY has been flat in the Asian and European sessions

• 113.80 is providing weak support
• 114.83 is the next resistance line
• Current range: 113.80 to 114.83

Further levels in both directions:

• Below: 113,80, 112.57, 110.94, and 109.77
•  Above: 114.83, 115.90 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in short positions. Currently, long positions have a slender majority (52%), indicative of slight trader bias towards USD/JPY breaking out 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.