Japanese Yen Improves, Shrugs Off Sharp US Numbers
MarketPulse | May 03, 2018 10:58AM ET
The Japanese yen has posted gains in the Thursday session, after little movement on Wednesday. In North American trade, USD/JPY is trading at 109.37, down 0.42% on the day. On the release front, unemployment claims edged up to 211 thousand, easily beating the estimate of 225 thousand. In the services sector, ISM Non-Manufacturing PMI dropped for a third straight month, coming in at 56.8 points, above the estimate of 56.1 points. There are no Japanese events, as Japan is closed for a holiday. On Friday, the focus is on US employment data, with the release of wage growth, nonfarm payrolls and the unemployment rate.
As expected, the Federal Reserve maintained the benchmark rate at a target of 1.5% to 1.75% on Wednesday. The rate statement was significant, with policymakers noting that “overall inflation has moved closer to 2 percent”. This was more hawkish than the March statement, which said that inflation indicators “have continued to run below 2 percent”. With inflation moving closer to the Fed target of 2 percent, there is a stronger likelihood that the Fed will upgrade its rate projection from three to four hikes in 2018. The odds of a fourth rate hike this year stand at 50%. The Fed rate statement also noted that “market-based measures of inflation compensation remain low”, a reference to soft wage growth, which is at 2.7%, lower than the 3% rate that the Fed would like to see.
Japan’s economic recovery has been impressive, as the economy has expanded for eight consecutive quarters, its longest streak since the 1980s. At the same time, the economy experienced a slowdown in the first quarter of 2018. Annualized growth in Q4 stood at 1.6% but stands to drop sharply in Q1, with an estimate of just 0.5%. One factor in the slowdown is a significant drop in exports, due to the stronger Japanese currency. The yen has gained about 3% against the dollar in 2018, hurting the competitiveness of Japanese exports. The Japanese consumer, however, remains pessimistic, and the April reading of 43.6 marked an 8-month low.
USD/JPY Fundamentals
Thursday (May 3)
- 7:30 US Challenger Job Cuts. Actual -1.4%
- 8:30 US Preliminary Nonfarm Productivity. Estimate 0.9%. Actual 0.7%
- 8:30 US Preliminary Unit Labor Costs. Estimate 3.1%. Actual 2.7%
- 8:30 US Trade Balance. Estimate -50.0B. Actual -49.0B
- 8:30 US Unemployment Claims. Estimate 225K. Actual 211K
- 9:45 US Final Services PMI. Estimate 54.4. Actual 54.6
- 10:00 US ISM Non-Manufacturing PMI. Estimate 58.1. Actual 56.8
- 10:00 US Factory Orders. Estimate 1.3%. Actual 1.6%
- 10:30 US Natural Gas Storage. Estimate 47B
Get The News You Want
Friday (May 4)
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 189K
- 8:30 US Unemployment Rate. Estimate 4.0%
*All release times are DST
*Key events are in bold
USD/JPY for Thursday, May 3, 2018
USD/JPY May 3 at 10:30 DST
Open: 109.83 High: 109.91 Low: 109.15 Close: 109.37
USD/JPY Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 107.29 | 108.00 | 108.89 | 110.11 | 111.22 | 112.06 |
USD/JPY has edged lower in the Asian and European sessions. The pair is steady 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 slight movement towards long positions in the Thursday session. Currently, long positions have a majority (62%), indicative of trader bias towards USD/JPY reversing directions and heading lower.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.