USD/JPY – Yen Steady Ahead of BoJ Rate Statement

The Japanese yen has steadied in the Thursday session, after posting six straight losing sessions. In North American trade, USD/JPY is trading at 109.33, down 0.09% on the day. On the release front, durable goods orders reports were mixed. Core Durable Goods Orders fell to 0.0%, missing the estimate of 0.5%. There was better news from Durable Goods Orders jumped 2.6%, crushing the estimate of 1.6%. Unemployment Claims dropped to 209 thousand, well below the estimate of 230 thousand. In Japan, there are a host of key indicators. Tokyo Core CPI is expected to remain unchanged at 0.8%. The Bank of Japan issues a policy statement and Governor Haruhiko Kuroda will host a press conference.

The US dollar continues to climb against its rivals, buoyed by rising yields on US bonds, which have hit 4-year highs. On Wednesday, 10-year US Treasury notes have risen to 3.015%, and 2-year bonds have increased to 2.504 percent. With inflation appearing to be on the rise, there are stronger expectations that the Federal Reserve will raise rates four times in 2018, which is good news for the US dollar. With oil pushing above $70 a barrel, there are concerns that inflation will rise, which has pushed bond prices lower and yields upwards. The US currency has also benefited from a reduction in geopolitical risk, with an easing of tensions between North and South Korea, and a lull in the conflict in Syria.

The Japanese economy continues to expand, but inflation has lagged behind growth and remains well below the Bank of Japan’s target of around 2 percent. The markets have been speculating that stronger economic conditions might cause the BoJ to re-examine its ultra-accommodative monetary policy. However, on Monday, BoJ Governor Haruhiko Kuroda poured cold water over such sentiment, stating that in order to reach its inflation target, “the Bank of Japan must continue very strong accommodative monetary policy for some time”. The BoJ will issue an inflation forecast on Friday, with the bank expected to reiterate that the inflation target will be reached in fiscal year 2019. Kuroda’s dovish statement can be seen as an attempt to curb volatility in the yen following the release of the inflation forecast.

Currency markets yield to dollar demand

USD/JPY Fundamentals

Thursday (April 26)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%. Actual 0.0%
• 8:30 US Durable Goods Orders. Estimate 1.6%. Actual 2.6%
• 8:30 US Unemployment Claims. Estimate 230K. Actual 209K
• 8:30 US Goods Trade Balance. Estimate -74.8B. Actual -68.0B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.6%. Actual 0.5%
• 10:30 US Natural Gas Storage. Estimate -11B. Actual -18B
• 19:30 Tokyo Core CPI. Estimate 0.8%
• 19:30 Japanese Unemployment Rate. Estimate 2.5%
• 19:50 Japanese Preliminary Industrial Production. Estimate 0.5%
• 19:30 Japanese Retail Sales. Estimate 1.5%
• Tentative – BoJ Policy Rate
• Tentative – BoJ Monetary Policy Statement
• Tentative – BoJ Outlook Report

 Friday (April 27)

• 1:00 Japanese Housing Starts. Estimate -5.1%
• Tentative – BoJ Press Conference
• 8:30 US Advance GDP. Estimate 2.0%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 98.0

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, April 26, 2018

USD/JPY April 26 at 11:20 DST

Open: 109.43 High: 109.47 Low: 109.07 Close: 109.35

USD/JPY Technical

USD/JPY showed little movement in the Asian session. The pair edged lower in the European session and has recovered in North American trade

• 108.89 is providing support
• 110.11 is the next resistance line

Further levels in both directions:

• Below: 108.89, 108.00, 107.29 and 106.64
• Above: 110.11, 111.22 and 112.06
• Current range: 108.89 to 110.11

OANDA’s Open Positions Ratios

USD/JPY ratio is showing little movement in the Thursday session. Currently, long positions have a majority (62%), indicative of trader bias towards USD/JPY reversing directions and moving to higher ground.

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.