USD/JPY – Yen Trading Quietly At 102

USD/JPY is drifting in Monday trade, as the pair trades just shy of the 102 line. In economic news, Japanese Current Account deficit widened in April and was well off the estimate. In the US, it’s a very quiet start to the week, with just one economic release – the US Federal Budget.

US Unemployment Claims rebounded last week, as the key indicator dipped to 319 thousand. This beat the estimate of 328 thousand. The reading follows last week’s excellent Nonfarm Payrolls and Unemployment Claims. JOLTS Jobs Openings failed to keep pace, slipping to 4.01 million, well off the estimate of 4.21 million. With the employment picture brightening, market sentiment remains strong toward the US economy, and this could strengthen the US dollar.

Federal Reserve Chair Janet Yellen testified before Congress last week and gave a cautious thumbs-up to the economic recovery. She said that the economy has improved, but pointed to two sore spots – the job market remains weak and inflation is below the Fed’s target of 2%. Yellen stated that she therefore expects that low interest rate levels will continue for a “considerable time”. Yellen has stated previously that slack remains in the economy, and the Fed is expected to proceed carefully with future trims to its QE scheme. Since December, the Fed has trimmed the asset-purchase program by almost half, cutting it to $45 billion each month.

Last week, the Bank of Japan released minutes of its last policy meeting. Bank policymakers expressed concern that the economic recovery is exerting some upward pressure on prices, but the rise might not be enough to hit the BOJ’s inflation target of 2%. The economy seems to have weathered the April sales hike nicely, and Household Spending posted a sharp gain in April, pointing to strong consumer spending. With inflation indicators continuing to point higher, the government will be focusing more attention on the nation’s staggering debt load, which is in excess of $10 trillion dollars.

USD/JPY for Monday, May 12, 2014

USD/JPY May 12 at 11:25 GMT

USD/JPY 101.92 H: 102.05 L: 101.84

USD/JPY Technical

• USD/JPY is drifting in the Monday trade.
• On the upside, 102.53 is the next line of resistance.
• 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, 103.07, 104.17, 105.70 and 106.85.

OANDA’s Open Positions Ratio

USD/JPY ratio is almost unchanged in Monday trading. This is consistent with the pair’s movement, as the yen is showing little movement at the start of the week. The ratio is made up of a substantial majority of long positions, indicating trader bias towards the dollar breaking out and moving upwards.

The pair is drifting in Monday trading. USD/JPY is unchanged in the European session.

USD/JPY Fundamentals

• 5:00 Japanese Economy Watchers Sentiment. Estimate 45.2 points. Actual 41.6 points.
• 16:00 US FOMC Member Charles Plosser Speaks.
• 18:00 US Federal Budget Balance. Estimate 112.6B.
• 23:50 Japanese M2 Money Stock. Estimate 3.4%.

*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.