USD/JPY Forecast Oct. 5-9 – Yen takes break from volatility

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Dollar/yen took a pause from its recent volatility, as the pair showed limited movement last week. In the upcoming week, Japan releases two consumer indicators, Average Cash Earnings and Household Spending. Both are expected to remain in negative territory.

USD/JPY fundamental mover

It was a busy week in Japan. Tokyo Core CPI fell to -0.3% in September, down from -0.2%. Retail sales remained in contraction with a reading of -1.9%, although this was better than the forecast of -3.2%. The Tankan indices remained well into contraction territory in Q3. The Manufacturing Index improved to -27, up from -34 points in Q1. The Non-Manufacturing Index rose from -12 to -9, up from -17 points. Japan’s monthly Manufacturing PMI came in at 47.7 in September. up from 47.2 points. The PMI has been below the 50-level, which separates contraction from expansion, since April 2019.

In the US, the Conference Board Consumer Confidence jumped to 101.8 in September, up from 86.3. This easily beat the forecast of 90.0 points. Third-estimate GDP for the second quarter was upwardly revised to -31.4%, up from -31.7%. On the manufacturing front, the ISM Manufacturing PMI remained well in expansionary territory, with a reading of 55.4 points, down slightly from 56.0. The neutral 50-mark separates contraction from expansion.

Job growth slowed sharply in September, as Nonfarm Payrolls fell to 661 thousand, down from 1.37 million beforehand. This was much weaker than the estimate of 900 thousand. Wage growth dropped from 0.4% to 0.1%, missing the forecast of 0.5%. Manufacturing continues to expand, as second-estimate Manufacturing PMI came in at 54.1, down slightly from the

See all the main events in the Forex Weekly Outlook

Key news updates for USD/JPY

Updates:

USD/JPY Technical Analysis

We start at the round number of 108, an important monthly resistance line.

107.29 (mentioned last week) is protecting the 107 level.

106.44 is next.

105.45 is an immediate resistance line.

104.50 is the first support level.

103.52 has held in support since March.

102.13 is the final support line for now.

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USD/JPY Daily Chart

USD/JPY Sentiment

I am neutral on USD/JPY

The US dollar showed some strength in September, but appears to have run out steam.  After a quiet week, will we see a resumption of volatility from the yen?

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.