USD/JPY – Yen Under Pressure After Mixed Japanese Data

The yen remains under pressure on Friday, as USD/JPY continues to trade above the 102 line. In economic news, Japanese releases were mixed, as inflation indicators looked solid, while consumer spending and manufacturing input fell below expectations.  US markets will be closing early on Friday and there are no US releases on the schedule. The sole Japanese release on Friday is Housing Starts, which posted a gain of 7.1%, easily beating the estimate.

Thursday was a busy day for Japanese releases, and the major events painted a mixed picture. Household Spending plunged to 0.9%, compared to 3.7% a month earlier. This key consumer spending indicator fell short of the estimate of a 1.2% gain. Preliminary Industrial Production also sagged, dropping from 1.5% to 0.5%. The markets had expected a strong gain of 2.1%. The news was better from Japanese inflation indicators, which continue to point upwards. Tokyo Core CPI hit 0.6%, its sharpest rise since January 2009. National Core CPI followed suit, with a gain of 0.9%, matching the forecast. This was the index’s best showing in almost five years. The strong inflation numbers signal that the Abe government is making great strides to stamp out deflation, which had hobbled the economy for years. However, inflation is nowhere near the 2% target which the Bank of Japan has set, and some policymakers are less optimistic than BOJ Governor Kuroda that this ambitious goal will be achieved.

For a second straight week, US Unemployment Claims dropped and came in lower than market expectations, although the euro managed to hold its own despite this. The key indicator dropped to an eight-week low of 316 thousand, easily beating the estimate of 331 thousand. With increasing speculation about a QE taper, employment releases will remain under the market microscope. If employment numbers continue to improve, we can expect the Fed to scale down QE early in 2014, which would likely give a big boost to the US dollar.

USD/JPY for Friday, November 29, 2013

USD/JPY November 29 at 10:15 GMT

USD/JPY 102.28 H: 102.61 L: 102.12

USD/JPY Technical

• USD/JPY is steady in Friday trading. The pair touched a high of 102.61 early in the Asian session but has retracted.
• The pair is facing resistance at 102.53. This line has already seen action on Friday and remains under pressure. This is followed by resistance at 103.30.
• 101.19 is providing strong support. It is followed by support at the key level of 100.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 98.92, 98.15, 97.18 and 96.00
• Above: 102.53, 103.30, 104.17, 105.70 and 107.27

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Friday trading. This movement is reflected in the pair’s current movement, as USD/JPY is almost unchanged. The ratio is close to an even split between long and short positions, which reflects a lack of trader bias as to which direction the pair might take.

The pair continues to trade at high levels, and is enjoying the view above the 102 level. With thin trading due to the holiday in the US, we can expect limited movement during the North American session.

USD/JPY Fundamentals

• 5:00 Japanese Housing Starts. Estimate 5.5%. Actual 7.1%.

*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.