Yesterday’s trade saw USD/JPY within the range of 119.77-121.02. The pair closed at 120.00, losing 0.46% on a daily basis and marking the first drop in the past three trading days. The daily high has been the highest level since September 10th, when the cross registered a high of 121.34.
At 8:24 GMT today USD/JPY was down 0.39% for the day to trade at 119.55. The pair overcame the lower range breakout level (S4), as it touched a daily low at 119.33 at 7:15 GMT. It has been the lowest level since September 8th, when a daily low of 118.83 was recorded. Support may be received within the 119.00-119.25 area.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
CB Leading Economic Indicator
The Conference Board Leading Economic Index for the United States probably increased 0.2% in August compared to a month ago, according to the median estimate by experts. In July the index unexpectedly dropped at a monthly rate of 0.2%. It has been the first decrease since March 2013, when a 0.2% slump was registered.
It encompasses a variety of economic indicators, which signify possible changes in overall economic activity. The index is comprised by the following components: average weekly hours in manufacturing, average weekly initial claims for unemployment insurance, manufacturers’ new orders, consumer goods and materials, ISM Index of New Orders, manufacturers new orders, non-defense capital goods excluding aircraft orders, building permits, new private housing units, Stock prices, 500 common stocks, Leading Credit Index, interest rate spread, 10-year Treasury bonds less federal funds, average consumer expectations for business conditions. Better-than-expected performance of the index is usually dollar positive. The Conference Board will release the official data at 14:00 GMT.
Fed’s rate decision
The US dollar lost ground against most of its major peers yesterday, after the Federal Reserve decided to leave the target range for the federal funds rate unchanged at 0 to 0.25%, stressing on concerns that global economic and financial developments may curb economic activity and suppress consumer price inflation even further in a short term.
According to extracts from the FOMC Statement, released yesterday: “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad.”
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation.”
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”
Bond Yield Spread
The yield on Japanese 2-year government bonds went as high as 0.026% on September 17th, after which it closed at the exact same level to add 0.004 percentage point on a daily basis, while marking a third consecutive trading day of gains.
The yield on US 2-year government bonds climbed as high as 0.815% on September 17th, after which it fell to 0.686% at the close to lose 12.5 basis points (0.125 percentage point) for the day. It has been the first drop in the past four trading days.
The spread between 2-year US and 2-year Japanese bond yields, which reflects the flow of funds in a short term, shrank to 0.660% on September 17th from 0.789% during the prior day. The September 17th yield difference has been the lowest one since August 25th, when the difference was 0.601%.
Meanwhile, the yield on Japans 10-year government bonds soared as high as 0.380% on September 17th, after which it slid to 0.371% at the close to lose 0.009 percentage point compared to September 16th. It has been the first drop in the past three trading days.
The yield on US 10-year government bonds climbed as high as 2.298% on September 17th, after which it slipped to 2.196% at the close to lose 10 basis points (0.100 percentage point) on a daily basis. It has been the first decrease in the past three trading days.
The spread between 10-year US and 10-year Japanese bond yields narrowed to 1.825% on September 17th from 1.916% during the prior day. The September 17th yield difference has been the lowest one since September 8th, when the spread was 1.816%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for USD/JPY are presented as follows:
R1 – 120.65
R2 – 120.77
R3 (range resistance – green on the 30-minute chart) – 120.88
R4 (range breakout – red on the 30-minute chart) – 121.23
S1 – 120.43
S2 – 120.31
S3 (range support – green on the 30-minute chart) – 120.20
S4 (range breakout – red on the 30-minute chart) – 119.85
By using the traditional method of calculation, the weekly pivot levels for USD/JPY are presented as follows:
Central Pivot Point – 120.19
R1 – 121.74
R2 – 122.89
R3 – 124.44
S1 – 119.04
S2 – 117.49
S3 – 116.34
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
