USD/JPY: Yen Pressing on Greenback Ahead Of Japanese Trade Balance

 | Oct 21, 2014 07:44AM ET

The Japanese yen is stable on Tuesday, as USD/JPY trades in the high-106 range in the European session. In Japan, All Industries Activities posted another decline, coming in at -0.1%. Later in the day, we’ll get a look at Trade Balance. Little change is expected from the previous release of -0.91 trillion yen. In the US, the only event on the calendar is Existing Homes Sales. The markets are expecting the indicator to improve in the September release.

On Monday, BoJ Governor Haruhiko Kuroda stated that Japan’s economy continues to improve modestly, although consumer demand has lessened since the consumption tax hike in April. The BoJ would prefer to stay on the sidelines, but there has been talk that the central bank could step in with additional stimulus if the economy takes a turn for the worse. Such a move would weigh on the already weak Japanese yen.

US releases wrapped up the week on a high note, as UoM Consumer Sentiment climbed to 86.4 points, its highest reading since July 2007. The markets had expected a reading of 84.3 points. This indicates that the US consumer remains optimistic about the economy and is not overly concerned about warnings of a global slowdown. On the housing front, Building Permits and Housing Starts met expectations. Strong US employment numbers continue to drive the US recovery, as US job claims dropped to 264 thousand, marking a 14-year low. The estimate stood at 286 thousand.

USD/JPY for Tuesday, October 21, 2014