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Wednesday, November 05, 2014

USD/JPY – Yen Slips to 7-Year Lows on Excellent ADP Nonfarm Payrolls

The Japanese yen continues to slide on Wednesday, having lost over 100 points on the day. After a pause on Tuesday, USD/JPY is back to its winning ways, and is trading in the mid-114 range.
In Japan, Average Cash Earnings dipped to 0.8%. BoJ Governor Haruhiko Kuroda spoke at an event in Tokyo. Later in the day, the BoJ will release the minutes of last week’s policy meeting. ADP Nonfarm Employment Change climbed to 230 thousand, well above expectations.
US job numbers have been solid in recent readings, and the trend continued with ADP Nonfarm Payrolls on Wednesday. The key indicator climbed to 230 thousand, easily beating the estimate of 214 thousand. This marked the indicator’s strongest showing in 2014. We’ll get a look at Unemployment Claims and the official Nonfarm Payrolls later in the week.
The yen took a tumble last week after the BoJ surprised the markets by increasing monetary stimulus. The BoJ increased the monetary base from JPY 60-70 trillion to 80 trillion per year. The Japanese central bank said that the move was needed to increase inflation, which remains short of the central bank’s target of 2%. The Japanese yen continues to trade at 7-year lows against the strong US dollar and could lose more ground.
USD/JPY for Wednesday, November 5, 2014

USD/JPY November 5 at 15:30 GMT
USD/JPY 114.56 H: 114.84 L: 113.47

USD/JPY Technical
S3 S2 S1 R1 R2 R3
110.68 112.94 113.68 114.65 115.75 116.66

  • USD/JY posted gains late in the Asian session, breaking above resistance at 113.68. The pair has posted slight gains in European trade and is stable in the North American session.
  • 113.68 has switched to a support role as the yen continues to post sharp losses. It is a strong line.
  • On the upside, 114.65 was tested earlier and is under pressure. USD/JPY could break above this line during the North American session. 115.75 is a stronger resistance line.
  • Current range: 113.68 to 114.65
Further levels in both directions:
  • Below: 113.68, 112.94, 110.68, 109.82 and 108.58
  • Above: 114.65, 115.75, 116.66 and 117.94

OANDA’s Open Positions Ratio
USD/JPY ratio is pointing to gains in long positions on Wednesday. This is consistent with the pair’s movement, as the yen continues to post sharp losses. The ratio currently has a majority of long positions, indicative of trader bias towards USD/JPY continuing to move upwards.

USD/JPY Fundamentals
  • 1:30 Japanese Average Cash Earnings. Estimate 0.9%. Actual 0.8%.
  • 2:30 BoJ Governor Haruhiko Kuroda Speaks.
  • 3:45 Japanese 10-year Bond Auction. Actual 0.44%.
  • 13:15 US ADP Non-Farm Employment Change. Estimate 214K. Actual 230K
  • 14:15 US FOMC Member Narayana Kocherlakota Speaks.
  • 14:45 US Final Services PMI. Estimate 57.3 points. Actual 57.1 points.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 58.2 points.
  • 15:30 US Crude Oil Inventories. Estimate 1.8M.
  • 23:50 BoJ Monetary Policy Meeting Minutes.
*Key releases are highlighted in bold
*All release times are GMT

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