USD/JPY – Yen Steady as US Manufacturing, Employment Data Shines

USD/JPY has inched higher in the Thursday session, following strong gains on Wednesday. In North American trade, the pair is trading slightly above the 115 line. On the release front, there are no Japanese events for the remainder of the week. In the US, there was positive news as manufacturing and employment reports easily beat expectations. Building Permits were within expectations. Friday is Inauguration Day in the US, and the markets will be closely monitoring President-elect Trump’s inaugural address to the nation. There are no economic indicators scheduled on Friday.

US numbers impressed on Thursday. The Fed Philly Manufacturing Index improved to 23.6, crushing the forecast of 16.3. This marked the highest reading since November 2014. On the job front, Unemployment Claims dropped to 234 thousand, well below the forecast of 252 thousand. This marked the fourth straight week that jobless claims have come in below the forecast. Unemployment Claims remain close to levels not seen since the 1970s, as the US labor market remains close to capacity.

On the cusp of Inauguration Day on Friday, there is a feeling of unease in the air, despite a robust US economy. Donald Trump’s upset election victory in November was warmly received by the markets, as the US stock market and the US dollar have climbed higher. However, confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. Trump’s comments earlier this week about the US dollar helped send the currency lower. In an interview with the Wall Street Journal on Monday, Trump complained that the currency was “too strong”. These sentiments were echoed on Tuesday by Trump advisor Anthony Scaramucci. Speaking at the World Economic Forum in Davos, Scaramucci warned that “we must be careful of a rising dollar.” Trump broke with the unwritten rule that US presidents refraining from commenting on the US dollar, and his comments could be a taste of more to come, as Trump is unlikely to veer from his habit of making controversial comments that could affect market movement.

Dollar Retraces Some of Trump’s Intervention Loss

USD/JPY Fundamentals

Thursday (January 19)

• 8:30 US Building Permits. Estimate 1.22M. Actual 1.21M
• 8:30 US Philly Fed Manufacturing Index. Estimate 16.3. Actual 23.6
• 8:30 US Unemployment Claims. Estimate 252K. Actual 234K
• 8:30 US Housing Starts. Estimate 1.19M. Actual 1.23M
• 10:30 US Natural Gas Storage. Estimate -235B
• 11:00 US Crude Oil Inventories. Estimate 0.1M
• 20:00 US Fed Chair Yellen Speech

Upcoming Key Events

Friday (January 20)

• Tentative – President Trump Speech

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, January 19, 2017

USD/JPY January 19 at 9:30 EST

Open: 114.70 High: 115.29 Low: 114.39 Close: 115.09

USD/JPY Technical

• USD/JPY showed limited movement in the Asian and European sessions. The pair has posted gains in North American trade
• 113.80 is providing support
• 114.83 was tested in resistance earlier and is under strong pressure
• Current range: 113.80 to 114.83

Further levels in both directions:

• Below: 113.80, 112.57, 110.94 and 109.85
•  Above: 114.83, 115.88 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Thursday session. Currently, short and long positions are almost an even split, indicative of a lack of trader bias as to what direction USD/JPY will take next.

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.