Yesterday’s trade saw USD/JPY within the range of 119.98-120.83. The daily high was the highest level since December 9th. The pair closed at 120.69, gaining 0.52% on a daily basis.
At 9:23 GMT today USD/JPY was down 0.22% for the day to trade at 120.43. The pair touched a daily low at 120.28 at 5:45 GMT.
Fundamentals
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on December 19th, probably increased to 290 000 from 289 000 in the prior week. The latter has been the lowest number in six weeks and the third consecutive decrease. The 4-week moving average was 298 750, or a decline of 750 compared with the previous weeks revised average. The previous weeks average was revised up by 250 to 299 500 from 299 250.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims fell more than projected, this would have a bullish effect on the greenback.
The number of continuing jobless claims probably decreased to the seasonally adjusted 2 368 000 during the week ended on December 12th, from 2 373 000 in the previous week. If so, this would be the lowest number of continuing jobless claims since the week ended on November 14th, when 2 323 000 claims were reported. This indicator represents the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 13:30 GMT.
Japan
Bank of Japan minutes
At 23:50 GMT the Bank of Japan is expected to release the minutes from its most recent meeting on policy, conducted on December 19th. The central bank decided to continue purchasing enough government bonds in order to expand monetary base at an annual pace of JPY 80 trillion. The bank is also expected to buy exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs), so that their amounts outstanding will increase at an annual pace of about JPY 3 trillion and about JPY 90 billion respectively.
According to extracts from BoJs most recent policy statement: “Japans economy has continued to recover moderately as a trend, and effects such as those of the decline in demand following the front-loaded increase prior to the consumption tax hike have been waning on the whole. Overseas economies — mainly advanced economies — have been recovering, albeit with a lackluster performance still seen in part. In this situation, exports have shown signs of picking up. Business fixed investment has been on a moderate increasing trend as corporate profits have improved.”
“With regard to the outlook, Japans economy is expected to continue its moderate recovery trend, and the effects such as those of the decline in demand following the front-loaded increase prior to the consumption tax hike are expected to dissipate. The year-on-year rate of increase in the CPI is likely to be at around the current level for the time being.”
“Quantitative and qualitative monetary easing (QQE) has been exerting its intended effects, and the Bank will continue with the QQE, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate.”
In case the minutes suggested a rather dovish outlook, this would have a bearish effect on the Japanese yen. A hawkish outlook, on the other hand, would have the opposite effect.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 120.50. In case USD/JPY manages to breach the first resistance level at 121.02, it will probably continue up to test 121.35. In case the second key resistance is broken, the pair will probably attempt to advance to 121.87.
If USD/JPY manages to breach the first key support at 120.17, it will probably continue to slide and test 119.65. With this second key support broken, the movement to the downside will probably continue to 119.32.
The mid-Pivot levels for today are as follows: M1 – 119.49, M2 – 119.91, M3 – 120.34, M4 – 120.76, M5 – 121.19, M6 – 121.61.
In weekly terms, the central pivot point is at 118.23. The three key resistance levels are as follows: R1 – 120.91, R2 – 122.31, R3 – 124.99. The three key support levels are: S1 – 116.83, S2 – 114.15, S3 – 112.75.
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