USD/JPY – Yen Climbs to 2-Week High on Optimistic BoJ Summary

USD/JPY has posted losses in the Thursday session. Currently, the pair is trading at 116.50. On the release front, the BoJ released its Summary of Opinions. In the US, today’s highlight is unemployment claims, with the indicator expected to edge up to 277 thousand.

The yen has climbed to 2-week highs on Thursday, courtesy of a positive report from the Bank of Japan. The bank’s Summary of Opinion, which was modestly upbeat, comes on the heels of last week’s rate statement, where the BoJ held rates at -0.10%. The summary noted that the economy is showing “moderate recovery”, boosted by stronger exports and steady consumer consumption. The report gave a thumbs up to the economy, stating that growth was expected to remain strong.

Japanese indicators were a mixed bag on Wednesday. Preliminary Industrial Production gained 1.5%, but this fell short of the forecast of 1.8%. There was better news from retail sales, which posted a strong gain of 1.7%. Earlier in the week, consumer indicators disappointed. Household Spending declined 1.5%, marking a ninth straight decline. The markets had predicted a small gain of 0.2%. The Japanese economy continues to grapple with deflation, as underscored by Tokyo Core CPI. The key indicator came in at -0.6%, weaker than the estimate of -0.4%. The BoJ continues to cling to its inflation target of 2.0%, but this goal is unlikely to be realized anytime soon. At the same time, the Japanese yen is down sharply, losing 11% since November 1. If the currency continues to head south, inflation levels could move higher.

With the US economy continuing to expand sharply, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. Recent consumer confidence surveys are pointing upwards, as the US consumer is optimistic that economic conditions will continue to improve under the incoming Trump administration. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed.

Wednesday (December 28)

• 18:50 BOJ Summary of Opinions

Thursday (December 29)

• 8:30 US Unemployment Claims. Estimate 277K
• 8:30 US Goods Trade Balance. Estimate -61.5B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.1%
• 10:30 US Natural Gas Storage. Estimate -219B. 
• 11:00 US Crude Oil Inventories. Estimate -1.3M

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, December 29, 2016

USD/JPY December 29 at 6:20 EST

Open: 117.08 High: 117.09 Low: 116.22 Close: 116.45

USD/JPY Technical

• USD/JPY has posted slight losses in the Asian and European sessions
• 115.88 is providing support
• 116.88 has switched to a resistance role following losses by USD/JPY
• Current range: 115.88 to 116.88

Further levels in both directions:

• Below: 115.88, 114.83 and 113.39
•  Above: 116.88, 118.05, 118.85 and 119.83

OANDA’s Open Positions Ratio

USD/JPY ratio is showing short positions with a majority (56%), indicative of trader bias towards USD/JPY continuing to move to lower 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.