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USD/JPY: Yen Stays Close To 100, Japanese Manufacturing PMI Next

USD/JPY: Yen Stays Close To 100, Japanese Manufacturing PMI Next

The Japanese yen is showing limited movement at the start of the week. Currently, USD/JPY is trading at 100.50. On the release front, there is just one event on the schedule, so we can expect a rather quiet day from USD/JPY. Japan will release Flash Manufacturing PMI, with an estimate of 49.5 points. There are no US events on the schedule. On Tuesday, BoJ Governor Haruhiko Kuroda will speak at an event in Tokyo, while the US will release New Home Sales.

Japan’s July trade surplus, released last week, was almost unchanged at JPY 0.32 trillion, crushing the estimate of JPY 0.14 trillion. This marked the third straight month that the trade surplus has convincingly beaten the estimates. The round number of 100 has become a major headache for the government and the BoJ, as the strong yen is bad for exports and is impeding attempts to raise inflation levels. The hesitant BoJ has not taken any significant monetary measures in recent months, which has emboldened market players to continue pushing the dollar lower. If the bank continues to stay on the sidelines, the markets will conclude that the BoJ has given up on further monetary easing. If the yen continues to strengthen, Japanese policymakers are likely to issue warnings that they will intervene in the currency markets in order to halt the yen’s upward movement. At a recent G-7 meeting, the US and Japan became entangled in a public spat when Japan threatened unilateral currency intervention. This scenario could play itself out yet again if the yen continues to rise and breaks below the 100 level.

USD/JPY Fundamentals

Monday (August 22)

  • 22:00 Japanese Flash Manufacturing PMI. Estimate 49.5

Tuesday (August 23)

  • 00:00 BoJ Governor Haruhiko Kuroda Speaks
  • 10:00 US New Home Sales

*Key events are in bold

*All release times are EDT

USD/JPY for Monday, August 22, 2016

USD/JPY Aug 21 To Aug 23 Chart

USD/JPY August 22 at 13:50 EDT

Open: 100.55 High: 100.93 Low: 100.48 Close: 100.52

USD/JPY Technical

S3S2S1R1R2R397.7898.9599.71101.20102.36103.73
  • USD/JPY posted gains in the Asian session but has retracted in European trade
  • 99.71 is providing support
  • There is resistance at 101.20
  • Current range: 99.71 to 101.20

Further levels in both directions:

  • Below: 99.71, 98.95 and 97.78
  • Above: 101.20, 102.36, 103.73 and 104.99

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged on Monday, continuing the trend seen in the Friday session. Currently, long positions have a strong majority (72%), indicative of trader bias towards USD/JPY breaking out and moving to higher ground.

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