USD/JPY

USD/JPY has reversed directions in Thursday trading, as the pair has edged higher and is within striking distance of the 103 line. In economic news, Japanese releases were mixed. Core Machinery Orders improved to 0.6%, but fell short of the estimate. It’s a busy schedule over in the US, with three major events – Core Retail Sales, Retail Sales and Unemployment Claims. There are no Japanese releases on Thursday.

Japanese manufacturing data continues to look sluggish this week. The BSI Manufacturing Index and Tertiary Industry Activity both fell short of their estimates earlier this week. There was no relief from Core Machinery Orders, which posted a gain of 0.6%, up sharply from -2.1% last month. However, this was well below the estimate or 0.9%. There was better news on the inflation front, as CGPI, a corporate inflation index, continues to improve. The index jumped 2.7%, matching the forecast. Just how much has the inflation picture improved in Japan? Last December, the indicator was floundering, as it posted a decline of 0.9%.

In the US, employment numbers have looked sharp in recent releases, and this week’s Job Openings hit 3.93 million. Although this missed the estimate, the figure was the best we’ve seen from the indicator in over five years. The Fed has said that a stronger employment picture is a prerequisite to QE tapering, and the recent strong numbers certainly increase the possibility of the Fed taking action at its December policy meeting. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies.

With memories of the October government shutdown still fresh on Capitol Hill, lawmakers have reached a budget deal which Congress will have to approve. The agreement will remove the risk of a government shutdown and reduce the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the economic uncertainty we’ve seen in recent months. Congress must approve a budget, or the US could face another government shutdown in mid-January.

USD/JPY for Thursday, December 12, 2013

USD/JPY December 12 at 11:45 GMT

USD/JPY 102.73 H: 102.94 L: 102.47

USD/JPY Technical

• USD/JPY has posted gains in Thursday trading. The pair touched a high of 102.93 earlier in the European session.
• 102.53 is providing weak support. This is followed by a support level at 101.19.
• On the upside, 103.30 is providing resistance. This is followed by resistance at 104.17, which has remained intact since September 2008.
• Current range: 102.53 to 10.30

Further levels in both directions:

• Below: 102.53, 101.19, 100.00, 98.92 and 98.15
• Above: 103.30, 104.17, 105.70 and 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is pointing to gains in long positions in Thursday trading. This is reflected in the pair, as the dollar has posted modest gains against the yen. The ratio continues to be made up of a majority of long positions, reflecting a trader bias towards the dollar continuing to move higher.

The pair has moved higher, and is trading close to the 103 line on Thursday. With the US releasing key employment and retail sales numbers later in the day, we could see some volatility from USD/JPY during the North American session.

USD/JPY Fundamentals

• 13:30 US Core Retail Sales. Exp. 0.2%.
• 13:30 US Retail Sales. Exp. 0.6%.
• 13:30 US Unemployment Claims. Exp. 321K.
• 13:30 US Import Prices. Exp. -0.7%.
• 15:00 US Business Inventories. Exp. 0.4%.
• 15:30 US Natural Gas Storage. Exp. -85B.
• 18:01 US 30-year Bond Auction.

*Key releases are highlighted in bold

*All release times are GMT