USD/JPY: Improving Yen Shrugs Off Weak Manufacturing Data

The Japanese yen has posted modest gains on Tuesday, as the pair trades in the mid-102 range. On the release front, Japanese manufacturing numbers slipped, as Tertiary Industry Activity and Preliminary Machine Tool Orders softened in May. We’ll get a look at the BSI Manufacturing Index later in the day. In the US, the NFIB Small Business Index continued to improve and beat the estimate. Today’s highlight is JOLTS Job Openings.

Japanese manufacturing numbers looked weak in May. Tertiary Industry Activity posted a decline of 5.4%, its worst showing in three years. Preliminary Machine Tool Orders dipped to just 24.1%, its weakest performance in 2014. There was much better news earlier in the week, as Final GDP soared 1.6% in Q1, a huge improvement from the weak gain of 0.2% in Q4. Current Account also looked sharp, posting a surplus for the first time since September.  These strong numbers have reinforced the BOJ’s contention that the improving economy will be able to weather the sales tax hike which took effect in April.

In the US, employment numbers were solid late last week. Unemployment Claims and Nonfarm Payrolls, both key indicators, met market expectations and helped the dollar hold its own against the euro. Unemployment Claims came in at 312 thousand, slightly above the estimate of 309 thousand. Nonfarm Employment Change met modest expectations on Friday, adding 217 thousand new jobs. The estimate stood at 214 thousand. The Unemployment Rate stayed pegged at 6.3%, beating the estimate of 6.4%. Solid employment numbers add to the likelihood that the Federal Reserve will continue to trim its QE program, which it plans to wind up by the end of 2014.


USD/JPY June 10 at 11:50 GMT

USD/JPY 102.35 H: 102.50 L: 102.22

USD/JPY Technical

  •  USD/JPY has posted slight losses on Tuesday.
  • On the upside, 102.53 is under pressure. The next resistance line is at 103.07, which has held firm since early April.
  • 101.19 is providing strong support.
  • Current range: 101.19 to 102.53

Further levels in both directions:

  • Below: 101.19, 100.00, 99.57 and 98.97.
  • Above: 102.53, 103.07, 104.17 and 105.70.

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions on Tuesday, continuing the trend we saw a day earlier. This is not consistent with the movement of the pair, as the yen has posted gains. The ratio continues to be made up of a majority of long positions, indicating trader bias towards the dollar reversing directions and moving upwards.

USD/JPY is trading in the mid-102 range. The pair has edged upwards in the European session.

USD/JPY Fundamentals

  • 5:59 Japanese Preliminary Machine Tool Orders. Actual 24.1%.
  • 11:30 US NFIB Small Business Index. Estimate 96.1 points. Actual 96.6 points.
  • 14:00 US JOLTS Job Openings. Estimate 4.04M.
  • 14:00 US Wholesale Inventories. Estimate 0.6%.
  • 23:50 Japanese BSI Manufacturing Index. Estimate 14.1 points.

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