USD/JPY – Japanese yen ticks higher, retail sales ahead

USD/JPY continues to have a quiet week. In Monday’s North American session, the pair is trading at 109.50, up 0.14% on the day. There are only two releases on the schedule. In the U.S., CB Consumer Confidence is expected to drop to 125.0 points. Japanese retail sales slowed to 1.4% in November and the downward trend is expected to continue in December, with an estimate of 0.9%. On Wednesday, the Federal Reserve will publish its monthly rate statement. Japan releases the BoJ summary of opinions from the January policy meeting as well as preliminary industrial production.

After four rate hikes last year, the Fed is widely expected to ease on policy in 2019. But by how much? The answer varies, depending on who you ask. The markets are not expecting any increases, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office (CBO) has also weighed in, saying that the expect further rate increases this year. The CBO made the forecast in its 10-year outlook update, but did not specify how many hikes. The CBO report projected growth of 2.3% for the U.S economy in 2019, matching the forecast of the Federal Reserve.

On Wednesday, the BoJ released the minutes from the BoJ meeting in December, with a message of “more of the same”. Policymakers stated that the bank would maintain its ultra-accommodative policy “for an extended period of time”. The BoJ also expressed concern about the Chinese slowdown and the negative impact it could have on the Japanese economy. Other members expressed concern over weak inflation, which remains well below the bank’s inflation target of around 2 percent. The U.S.-China trade war has weighed on Japan’s economy, and if the crisis continues, the economy could tip into recession. The key export sector is hurting, as exports fell in December to their lowest level in two years.

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USD/JPY Fundamentals

• 10:00 US CB Consumer Confidence. Estimate 125.0

• 18:50 Japanese Retail Sales. Estimate 0.9%

• 00:00 Japanese Consumer Confidence. Estimate 42.5

• 8:15 US ADP Nonfarm Employment Change. Estimate 170K

• 14:00 US FOMC Statement

• 14:00 US Federal Funds Rate. Estimate <2.50%

• 14:30 US FOMC Press Conference

• 18:50 BoJ Summary of Opinions

• 18:50 Japanese Preliminary Industrial Production. Estimate -0.5%

Open: 109.35 High: 109.50 Low: 109.13 Close: 109.50

USD/JPY Technical

USD/JPY posted small losses in the Asian session and partially recovered in the European session. The pair has resumed its downward movement in the North American session

• 109.37 has switched to a support level after losses by USD/JPY on Monday. It is a weak line

• 110.28 is the next resistance line

• Current range: 109.37 to 110.28

Further levels in both directions:

• Below: 108.11, 107.36 and 106.62

• Above: 108.11, 109.37, 110.28 and 110.90