USD/JPY – Yen On A Roll After Upbeat BOJ Comments

The Japanese yen continues to rally, as USD/JPY has dropped into the low-102 range. The yen got a boost from comments by Bank of Japan head Governor Haruhiko Kuroda, who said that a planned sales tax increase would not require further stimulus. The Japanese currency has now gained about 160 pips against the dollar since Friday. On the release front, Japanese Current Account matched the forecast and Economy Watchers Sentiment easily beat the estimate. In the US, today’s highlight is JOLTS Job Openings. The markets are expecting slight improvement in the March release.

The BOJ concluded a two-day meeting on Tuesday, and as expected, the central bank stated it was maintaining its monetary base at an annual level of 60-70 trillion yen each year. The government raised the sales tax last week, which will help reduce the country’s massive debt but also is likely to slow down the economy. However, BOJ Governor Haruhiko Kuroda said that there is no need to add stimulus at present, and the yen responded by continuing its rally. There is a strong likelihood that the Bank could introduce further easing in July, when the government is expected to introduce measures to stimulate the economy.

On Friday, all eyes were on US Non-Farm Payrolls, one of the most important economic indicators. The indicator rose nicely last in March, climbing to 192 thousand, compared to 175 thousand a month earlier. However, the markets were looking for more, with the estimate standing at 199 thousand. Unemployment Claims also fell short of the estimate, as it remained unchanged at 6.7%. Although these numbers were not as strong as hoped, the Federal Reserve is expected to continue trimming QE when it meets at the end of April. These tapers mark a vote of confidence in the US economy by the Federal Reserve, and are dollar-positive.

USD/JPY for Tuesday, April 8, 2014

USD/JPY April 8 at 12:38 GMT

USD/JPY 102.23 H: 103.07 L: 102.12

USD/JPY Technical

• USD/JPY is down sharply on Tuesday, as the pair has dropped towards the 102 level.
• 102.53 has switched to resistance as the yen continues to post gains. This is a weak line which could see action during the day. This is followed by 103.07.
• On the downside, 101.19 is providing strong support.
• 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, 103.30, 104.17, 105.70 and 106.85.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to strong gains in long positions in Tuesday trading. This is consistent with the movement of the pair, as strong gains by the yen have led to numerous open short positions being covered, resulting in a larger percentage of long positions. The ratio now has a strong majority of long positions, indicating trader bias towards the dollar reversing directions and moving upwards.

USD/JPY continues to lose ground on Tuesday. The yen has posted strong gains in the European session.

USD/JPY Fundamentals

• 2:50 Bank of Japan Monetary Policy Statement.
• 5:00 Japanese Economy Watchers Sentiment. Estimate 54.1 points. Actual 57.9 points.
• 6:33 Bank of Japan Press Conference.
• 11:30 US NFIB Small Business Index. Estimate 92.3 points. Actual 93.4 points.
• 14:00 US JOLTS Job Openings. Estimate 3.99M.
• 17:30 US FOMC Member Narayana Kocherlakota Speaks.
• 18:45 US FOMC Member Charles Plosser Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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