USD/JPY – Japanese yen lower despite soft U.S GDP

USD/JPY has recorded slight losses on Thursday. In the North American session, the pair is trading at 110.70, up 0.16% on the day. On the release front, In the U.S., Final GDP for the fourth quarter posted a 2.2% gain, shy of the estimate of 2.4%. Unemployment claims fell to 211 thousand, easily beating the estimate of 221 thousand. Later in the day, Japan releases key consumer data. Tokyo Core CPI is expected to remain steady at 1.1%. Retail sales are projected to rise to 0.9% in February, after a gain of 0.6% in January. Friday will also be busy, as the U.S. releases consumer spending and inflation data.

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Global trade tensions have weighed on inflation levels in the developed economies, and the U.S. is no exception. However, with the Fed saying it will put a hold on rates until 2020, could that change? At the Fed policy meeting, policymakers lowered their inflation forecast for 2020, citing weakness in the Chinese and European economies. However, the chief economist of Credit Suisse, James Sweeney, has taken a different tack, saying that U.S. inflation could climb as high as 2.3% next year, in response to the lack of rate hikes. Sweeney said that although inflation remains below the Fed target of 2.0%, there are signs in the services sector of inflation picking up.

The nasty trade war between the U.S. and China has hit Japan hard, as both countries are major trading partners with Japan. The weaker global climate has resulted in weaker demand for Japanese exports, and there are growing concerns that the fragile economy could be heading for a recession. Earlier in the week, the BoJ released the summary of opinions from the March policy meeting. Policymakers debated whether to ramp up stimulus in order to boost growth. Inflation levels remain sluggish, and the scheduled tax hike in October, which is certain to weigh on growth, poses another headache for policymakers.

Muted response to news of trade talk progress

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USD/JPY Fundamentals

Thursday (March 28)

  • 7:15 US FPMC Member Quarles Speaks
  • 8:30 US Final GDP. Estimate 2.4%. Actual 2.2%

  • 8:30 US Final GDP Price Index. Estimate 1.8%. Actual 1.7%
  • 8:30 US Unemployment Claims. Estimate 222K
  • 9:30 US FOMC Member Clarida Speaks
  • 9:30 US FOMC Member Bowman Speaks
  • 10:00 US Pending Home Sales. Estimate 0.1%. Actual -1.0%
  • 10:30 US Natural Gas Storage. Estimate -43B
  • 17:20 FOMC Member Bullard Speaks
  • 19:30 Tokyo Core CPI. Estimate 1.1%
  • 19:30 Japanese Unemployment Rate. Estimate 2.5%
  • 19:50 Japanese Preliminary Industrial Production. Estimate 1.4%
  • 19:50 Japanese Retail Sales. Estimate 0.9%

Friday (March 29)

  • 8:30 US Core PCE Price Index. Estimate 0.2%
  • 8:30 US Core Personal Spending. Estimate 0.3%
  • 9:45 Chicago PMI. Estimate 61.1
  • 10:00 UoM Revised Consumer Sentiment. Estimate 97.8

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, March 28, 2019

USD/JPY March 28 at 11:10 DST

Open: 110.51 High: 111.83 Low: 110.02 Close: 110.71

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.11 109.37 110.28 110.90 112.16 112.93

USD/JPY posted slight losses in the Asian session but recovered in European trade. The pair continues to post gains in North American trade

  • 110.28 is providing support
  • 110.90 is a weak resistance line
  • Current range: 110.28 to 110.90

Further levels in both directions:

  • Below: 110.28, 109.37 and 108.11
  • Above: 110.90, 112.16, 112.93 and 113.70

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