USD/JPY – Yen Lower as G-20 Issues Soft Currency Statement

The Japanese yen continues to lose ground against the US dollar, and is currently testing the 94 level. The yen edged lower following the G-20 meeting, which issued a mild statement about exchange rates and did not mention Japan by name. In the US, the week ended on a positive note, as consumer confidence and manufacturing data looked sharp. On Monday, the US markets are closed for Presidents Day, and there is only one release out of Japan, as the Bank of Japan will issue the minutes of its most recent policy meeting.

In Russia, the G-20 concluded a two-day meeting on the weekend. The talks were attended by finance ministers and central bank governors, and the final statement included a mild comment on the recent volatility in exchange rates. The leaders pledged not to “target our exchange rates for competitive purposes”, and to move more rapidly to market-determined exchange rate systems. The G-20 statement did not make reference to Japan, which has come under fire for monetary policies which have led to free-fall in the value of the Japanese yen. G-20 leaders appear resigned to the yen continuing to slide, but do not want Japanese officials to make public statements which will pull down the currency. Thus, Japan’s major trading partners, although not pleased about the tumbling yen, have tacitly given Japan a green light to continue to stimulate its economy with further monetary easing measures and higher inflation, which will likely have a negative impact on the yen.

In the US, UoM Consumer Sentiment and the Empire State Manufacturing Index looked sharp. Consumer Sentiment rose to 76.3 points, exceeding the estimate of 74.8 points. The Manufacturing Index jumped 10 points, well above the forecast of -2.1 points. The markets were pleased with the data, as both indicators have been struggling recently. These numbers come on the heels of excellent US employment data. If US indicators continue to point to an improving US economy, we could see the dollar push higher at the expense of the yen.

USD/JPY for Monday, February 18, 2013

USD/JPY on February 18 at 11:50 GMT

USD/JPY 93.97 H: 94.21 L: 93.71

USD/JPY is busy as we start the new week, as the pair tests the 94 line. On the downside, 93.73 is providing support. This is a weak line, and could face more activity if the pair reverses direction. There is stronger support at 93.14. The pair faces resistance at 94.59. This line has not been tested since May 2010, but given the volatility of the pair, cannot be considered safe. This is followed  by resistance above the 95 level, at 95.27. 

• Current range: 93.73 to 94.59.

Further levels in both directions:

• Below: 93.73, 93.14, 92.53,91.94, 91,30 and 90.91.
• Above: 94.59, 95.27, 96.06 and 97.48.

OANDA’s Open Position Ratios

The USD/JPY ratio is ponting to movement in favor of short positions. The ratio positions are close to an even split, and the current movement indicates a bias towards the yen recovering against the dollar. In the meantime, the yen remains under strong pressure as it tries to remain in 93 territory.

USD/JPY Fundamentals

• 23:50 Bank of Japan Monetary Policy Meeting Minutes.

*Key releases are highlighted in bold

*All release times are GMT

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