USD/JPY – Yen Ticks Higher, Japanese Current Account, GDP Next

USD/JPY continues to hug the 114 line in the Tuesday session. On the release front, the US will release Trade Balance and Factory Orders. There are no Japanese events on the schedule. On Wednesday, Japan releases Current Account and Final GDP, with both indicators expected to post gains.

The Japanese economy remains gripped by deflation, but this hasn’t boosted consumer indicators. Consumer spending was down in October, as Household Spending and Retail Sales both posted declines. On Monday, Consumer Confidence dropped to 40.9, marking its lowest level since May. November was a dismal month for the yen, as the US dollar ran roughshod over the Japanese currency. USD/JPY surged 9.4 percent, as the yen dropped to 10-month lows. The dollar has surged since the election of Donald Trump and the expected rate hike by the Federal Reserve this month could extend the misery of the struggling Japanese yen.

The spotlight was on US employment numbers on Friday and the readings were mixed. Nonfarm Payrolls improved to 178 thousand, edging above the forecast of 177 thousand. This marked a 4-month high. However, Average Hourly Earnings, which measures wage growth, surprised with a decline of 0.1%, short of the estimate of 0.2%. This was the first decline in wage growth since March. The unemployment rate dropped to just 4.6%, well below the forecast of 4.9%. The decrease in labor market slack is likely to put more pressure on inflation levels, which remain weak despite a strong economy. Preliminary GDP grow at a clip of 3.2% in the third quarter, beating the estimate of 3.0%.

USD/JPY Fundamentals

Tuesday (December 6)
8:30 US Revised Nonfarm Productivity. Estimate 3.2%
8:30 US Trade Balance. Estimate -41.5B
8:30 US Revised Unit Labor Costs. Estimate 0.4%
10:00 US Factory Orders. Estimate 2.5%
10:00 US IBD/TIPP Economic Optimism. Estimate 52.3

Wednesday (December 7)
18:50 Japanese Current Account. Estimate 1.57T
18:50 Japanese Final GDP. Estimate 0.6%

USD/JPY for Tuesday, December 6, 2016

Open: 113.85 High: 114.19 Low: 113.50 Close: 114.01

USD/JPY Technical

S3 S2 S1 R1 R2 R3
111.45 112.48 113.86 114.83 115.85 117.49

USD/JPY has showed limited movement in the Asian session and has posted small gains in European trade

113.86 is a weak support line
114.83 is the next line of resistance
Current range: 113.86 to 114.83

Further levels in both directions:
Below: 113.86, 112.48, 111.45 and 110.24
Above: 114.13, 115.45 and 116.88

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