USD/JPY firmly above 105 as Japan PPI and machinery data disappoint

USD/JPY firmly above 105 as Japan PPI and machinery data disappoint
Written by:
Crispus Nyaga
12th November, 04:11
  • The USD/JPY is firmly above 105.00 as traders react to Japan's machinery orders and PPI numbers.
  • Core machinery orders dropped by 4.4% in September leading to an annual decline of 11.5%.
  • PPI declined by 0.2% in October leading to an annual decline of 2.1%.

The USD/JPY price is firmly above 105 after mixed economic data from Japan. The pair is trading at 105.30, which is slightly below yesterday’s high of 105.67.

USD/JPY one-hour chart

Japan machinery orders decline

Japan is a well-known manufacturer of machines that are used in all sectors of the world economy like mining, agriculture, and construction. In 2019, the country exported machinery worth more than $137 billion. That made it the second-biggest exports from vehicles.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Therefore, investors pay close attention to the monthly machinery order numbers. According to the Cabinet Office, the core machinery orders declined by 4.4% in September after rising by 0.2% in the previous month. That made it the first time in three months that the orders have fallen. As a result, the orders fell by an annualised rate of 11.5%, better than the consensus estimate of 11.6%.

Data from the bureau showed that private sector orders that exclude volatile ships and electrical companies fell by 4.4%. Orders from governments increased by 20% while those from overseas markets fell by 16.7%.

Another data from the Bank of Japan (BOJ) showed that the producer price index declined 0.2% in October after falling by 0.2% in the previous month. The prices declined at an annualised rate of 2.1%, which is a sign that the Japanese economy is going through a period of low inflation.

Meanwhile, the export price index rose by 0.2% in October while the import price index rose by 0.1%.

US inflation eyed

The USD/JPY will later on react to inflation data from the United States. The numbers, which will be released by the US bureau of statistics, will come out at 13:30 GMT. Analysts polled by Reuters expect the numbers to show that consumer prices increased by 0.1% in October. That will be slightly lower than the previous month’s 0.2%.

On an annualised basis, they expect the CPI to increase by 1.3%, down from September’s increase of 1.4%

Analysts also expect the core CPI, which excludes the volatile food and energy, to rise by a monthly rate of 0.2% and at an annualised rate of 1.8%.

USD/JPY technical outlook

USD/JPY technical chart

The USD/JPY pair is trading at 105.30, which is higher than this week’s low of 103.16. On the daily chart, the price is between the middle and upper line of the Bollinger bands. It is also along the upper line of the descending channel that is shown in pink. The pair also seems to be forming a bullish pennant pattern, which is an indication that it may continue rising, with the next level to watch being 106.00. Are you a new trader? Use our free forex courses to get started.

Invezz uses cookies to provide you with a great user experience. By using Invezz, you accept our privacy policy.