USD/JPY – Yen Steady Ahead of Japanese Industrial Production, Retail Sales

USD/JPY has started the week with limited movement. Currently, USD/JPY is trading at 112.30. On the economic front, the US releases durable goods orders reports and Pending Home Sales. Japan will release Preliminary Industrial Production and Retail Sales. On Tuesday, the US releases Preliminary GDP and CB Consumer Confidence. As well, President Trump will address a joint session of Congress.

US data was soft on Friday. Revised UoM Consumer Sentiment dropped to 96.3 in February, compared to 98.5 a month earlier. Still, this figure edged above the forecast of 96.1. On the housing sector, New Home Sales improved to 555 thousand in January, but this was well short of the forecast of 575 thousand. This follows Existing Home Sales, which jumped to 5.69 million, above the estimate of 5.55 million. On Monday, we’ll get a look at Pending Home Sales, which is expected to dip to 1.1%.

President Trump’s administration has a rough first month, beset by constant friction with the media and trouble filling in key cabinet positions. Trump will address Congress on Tuesday and the nation will be listening closely. Will we see the combative, outspoken Trump, or will he opt for a more conciliatory approach? In order to pass key legislation, Trump will have to make nice with lawmakers from both sides of the fence, and this speech would be an ideal time to offer a hand of cooperation rather than combat. The markets will be looking for some details about the administration’s economic plan – if this is lacking, market sentiment could sour, dragging down the US dollar.

With the Japanese yen hovering at low levels, imports have become pricier for Japanese consumers. Predictably, the response has been a drop in consumer spending. In its monthly economic report, the government lowered its assessment of consumer spending, the first downgrade in 11 months. Conversely, the weak yen has been a boom for exports, prompting the government to raise its assessment of exports for the first time in four months. The report did not change the overall assessment that the economy is recovering at a moderate clip. Japanese policymakers are concerned about the protectionist stance under President Donald Trump. Japanese Prime Minister Shinzu Abe met recently with Trump in Washington and defused a currency policy crisis. Still, Trump is unhappy with the trade balance between the two countries, so some turbulence could lie ahead in US-Japanese relations.

USD/JPY Fundamentals

Monday (February 27)

• 8:30 US Core Durable Goods Orders. Estimate 0.5%
• 8:30 US Durable Goods Orders. Estimate 1.6%
• 10:00 US Pending Home Sales. Estimate 1.1%
• 11:00 US FOMC Member Robert Kaplan Speech
• 18:50 Japanese Preliminary Industrial Production. Estimate 0.4%
• 18:50 Japanese Retail Sales. Estimate 1.0%

Tuesday (February 28)

• 8:30 US Preliminary GDP. Estimate 2.1%
• 10:00 US CB Consumer Confidence. Estimate 111.1

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, February 27, 2017

USD/JPY February 27 at 8:15 EST

Open: 112.18 High: 112.35 Low: 111.90 Close: 112.29

USD/JPY Technical

USD/JPY showed little movement in the Asian session and has edged higher in European trade

• 110.94 is providing support
• 112.57 is a weak resistance line
• Current range: 110.94 to 112.57

Further levels in both directions:

• Below: 110.94, 109.77 and 109.18
•  Above: 112.57, 113.80, 114.83 and 115.90

OANDA’s Open Positions Ratio

In the Monday session, USD/JPY ratio is showing long positions with a majority (63%), indicative of trader bias towards USD/JPY continuing to move upwards.

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.