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USD/JPY: Dollar Hits 114 As Yen Slide Continues

USD/JPY: Dollar Hits 114 As Yen Slide Continues

USD/JPY has edged lower on Thursday, following sharp gains in the Wednesday session. Currently, USD/JPY is trading slightly above the 114 level. On the release front, Japanese Capital Spending posted a sharp decline of 1.3 percent, well below expectations. In the US, it’s a busy day, with two key events – unemployment claims and ISM Manufacturing PMI. US employment indicators will be in the spotlight on Friday, highlighted by Nonfarm Payrolls. The indicator is expected to climb to 165 thousand.

The US dollar ran roughshod over the struggling yen on Wednesday. USD/JPY jumped 2.0% and climbed close to the 115 line, its highest level since early February. The yen will be happy to say goodbye to the month of November, in which it plunged 9.5 percent. The greenback has enjoyed strong gains against most major currencies, buoyed by the election of Donald Trump and an expected rate hike from the Federal Reserve December.

The US economy continues to roll, and this week’s strong GDP and consumer confidence numbers have boosted the greenback to higher levels. Preliminary GDP sparkled in the third quarter, as the economy expanded 3.2%, above the forecast of 3.0%. The 3.2% gain was an upwards revision of Advance GDP, which came in at 2.9%. Solid consumer confidence numbers have been a critical factor in the US recovery, as an optimistic consumer is likely to go out and spend money.

CB Consumer Confidence jumped to 107.1 points in November, surpassing the 100-level for the third time in four months. Last week, UoM Consumer Sentiment jumped to 93.8 points, its highest level since May. Donald Trump’s surprise election victory has not had an adverse effect on consumer confidence, and if these rosy numbers translate into stronger consumer spending, the US dollar could continue to climb against its rivals.

US Q3 GDP Revised Upward on Consumer Spending

USD/JPY Fundamentals

Wednesday (November 30)

  • 19:50 Japanese Capital Spending. Estimate -0.4%. Actual -1.3%

Thursday (December 1)

  • 7:30 US Challenger Job Cuts
  • 8:30 US Unemployment Claims. Estimate 252K
  • 9:45 US Final Manufacturing PMI. Estimate 53.9
  • 10:00 US ISM Manufacturing PMI. Estimate 52.1
  • 10:00 US Construction Spending. Estimate 0.6%
  • 10:00 US ISM Manufacturing Prices. Estimate 52.0
  • 10:30 US Natural Gas Storage. Estimate -52B
  • All Day – US Total Vehicle Sales

Upcoming Key Events

Friday (December 2)

  • 13:30 US Average Hourly Earnings. Estimate 0.2%
  • 13:30 US Nonfarm Employment Change. Estimate 165K
  • 13:30 US Unemployment Rate. Estimate 4.9%
  • 18:50 Japanese Monetary Base. Estimate 23.2%

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, December 1, 2016


USD/JPY December 1 at 6:50 EST

Open: 114.15 High: 114.36 Low: 114.12 Close: 114.29

USD/JPY Technical

  • USD/JPY posted sharp gains on Wednesday and broke above two resistance lines
  • 114.13 is a weak support line. It could see action during the day
  • 115.45 is the next resistance line
  • Current range: 114.13 to 115.45

Further levels in both directions:

  • Below: 114.13, 113.86, 112.48 and 111.45
  • Above: 115.45, 116.88 and 118.05

OANDA’s Open Positions Ratio

USD/JPY ratio almost unchanged in the Thursday session. Currently, short positions have a majority (53%), indicative of trader bias towards USD/JPY continuing to move lower.

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