Friday’s trade saw USD/JPY within the range of 120.63-121.73. The pair closed at 121.72, soaring 0.57% on a daily basis and marking the fourth consecutive trading day of gains. The daily high has been the highest level since August 24th, when the cross registered a high of 122.04.
At 7:49 GMT today USD/JPY was down 0.42% for the day to trade at 121.19. The pair touched a daily low at 120.88 at 4:35 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
Chicago Manufacturing Survey
The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 54.5 in August, according to expectations, from 54.7 during the prior month. The latter has been the highest reading since January 2015, when the PMI came in at 59.4. The index reflects business conditions in the regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI lowered more than forecast, this would have a moderate bearish effect on the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.
Correlation with other Majors
Taking into account the week ended on August 30th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:
USD/JPY to USD/CHF (0.9488, or very strong)
USD/JPY to AUD/USD (0.5449, or strong)
USD/JPY to NZD/USD (-0.3322, or moderate)
USD/JPY to USD/CAD (-0.8792, or very strong)
USD/JPY to GBP/USD (-0.9412, or very strong)
USD/JPY to EUR/USD (-0.9739, or very strong)
1. During the examined period USD/JPY moved almost equally in one and the same direction with USD/CHF.
2. USD/JPY moved almost equally in the opposite direction compared to USD/CAD, GBP/USD and EUR/USD during the period.
3. USD/JPY moved strongly in one and the same direction with AUD/USD during the past week.
Bond Yield Spread
The yield on Japanese 2-year government bonds went as high as 0.015% on August 28th, which confirmed the high recorded a day ago, after which it slid to 0.012% at the close to remain unchanged on a daily basis.
The yield on US 2-year government bonds climbed as high as 0.735% on August 28th, or the highest level since August 19th (0.738%), after which it fell to 0.724% at the close to add 2.4 basis points (0.024 percentage point) for the day, while marking a fourth successive trading day of gains.
The spread between 2-year US and 2-year Japanese bond yields, which reflects the flow of funds in a short term, expanded to 0.712% on August 28th from 0.688% during the prior day. The August 28th yield spread has been the most notable one since August 18th, when the difference was 0.715%.
Meanwhile, the yield on Japans 10-year government bonds soared as high as 0.390% on August 28th, after which it slid to 0.386% at the close to lose 0.002 percentage point compared to August 27th, while marking the first drop in the past four trading days.
The yield on US 10-year government bonds climbed as high as 2.197% on August 28th, after which it slipped to 2.184% at the close to lose 0.007 percentage point on a daily basis. It has been the first drop in the past four trading days.
The spread between 10-year US and 10-year Japanese bond yields narrowed to 1.798% on August 28th from 1.803% during the prior day. The August 28th yield difference has been the lowest one since August 25th, when the spread was 1.704%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/JPY are presented as follows:
R1 – 121.82
R2 – 121.92
R3 (range resistance – green on the 30-minute chart) – 122.02
R4 (range breakout – red on the 30-minute chart) – 122.33
S1 – 121.62
S2 – 121.52
S3 (range support – green on the 30-minute chart) – 121.42
S4 (range breakout – red on the 30-minute chart) – 121.12
By using the traditional method of calculation, the weekly pivot levels for USD/JPY are presented as follows:
Central Pivot Point – 120.07
R1 – 123.68
R2 – 125.64
R3 – 129.25
S1 – 118.11
S2 – 114.50
S3 – 112.54
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