USDJPY on Friday dropped -0.36% to 149.49. Week ending 2024-10-18 rose 0.1%. What happened.

USDJPY Analysis

Performance
Period	Pct	Chg	Momentum
Friday	-0.36%	-53.8 Pips
Week 242024-10-18	0.1%	15.1 Pips
October	4.02%	577.499 Pips

Upcoming key events for the new week (London Time)

Thu 01:30 PM Initial Unemployment Insurance Claims
Fri 12:30 AM Tokyo CPI (Inflation Rate) (12-mth)
Fri 12:30 AM Tokyo CPI excluding fresh food and energy (12-mth)

What happened over the week

In the United States, the economic data presented a mixed picture in September. The U.S. Building Permits fell to 1.428 million from a revised 1.47 million in August, while Housing Starts slightly decreased to 1.354 million from an adjusted 1.361 million in the previous month, according to the Census Bureau. On a positive note, the Manufacturing Business Outlook showed a significant rise to 10.3 points in October, up from 1.7 points in September, as reported by the Philadelphia Fed. Furthermore, U.S. Monthly Retail Trade improved by 0.4%, surpassing the 0.1% growth in August. Lastly, Initial Unemployment Insurance Claims dropped to 241,000 for the week ending October 12, down from 258,000. These statistics demonstrate a strengthening of the labor market, with a moderate increase in retail activities, which may indicate a modest expansion in consumer spending.

In Japan, the inflation data indicated varying movements for September. The National CPI excluding Food and Energy rose slightly to 2.1% from 2% in August, as per the Statistics Bureau of Japan, whereas the National CPI excluding Fresh Food slipped to 2.4% from 2.8% and the overall CPI Inflation Rate decreased to 2.5% from 3%. This points towards moderating inflation pressures. Exports suffered a notable decline by falling to -1.7% from 5.5% in August, while imports also reduced marginally to 2.1% from 2.3%, leading to an improved trade balance at -294.3¥ from -695.3¥, as detailed by the Ministry of Finance Japan. This improvement in the trade balance could alleviate some external sector pressures on the Japanese economy.

Regarding the USD/JPY currency pair, the data released suggests divergent economic movements between the U.S. and Japan. The strengthening labor market, improved retail sales, and rising manufacturing outlook in the U.S. indicate robust economic activity, potentially supporting a stronger U.S. dollar. Conversely, Japan’s declining exports and moderating inflation might suggest a less robust economic outlook, potentially curbing the yen’s strength. Despite Friday’s slight drop of -0.36% to 149.49 in USD/JPY, the overall sentiment with stronger U.S. economic data could lead to a near-term appreciation of the U.S. dollar against the yen, unless upcoming Japanese inflation data triggers reassessment by market participants.

From social media

Developments in Real Exports and Real Imports https://t.co/iIBjvXqoUH

— Bank of Japan (@Bank_of_Japan_e) October 17, 2024

What can we expect from USDJPY for the new week and what happened on Friday?

USDJPY on Friday dropped -0.36% to 149.49. Price is above 9-Day EMA while Stochastic is falling. For the week ending ,2024-10-18, the pair rose 0.1% or 15.1 pips higher.

Looking ahead, USDJPY looks bearish as the pair posted lower in Friday trading session.

For the new week, our technical outlook is mixed. To see upside interest, we prefer to look at price breakout of week high of 150.29 or at least consolidates above Weekly Pivot level of 149.54. On the downside, we are looking at week low 148.85 or 148.80 (WS1) as immediate support level. USDJPY need to break on either side to indicate a short-term bias. A break above 150.29 would suggest bullish bias after recent positive movement.

For the month of October, USDJPY is up by 4.02% or 577.499 pips higher.

Weekly key levels to watch out:

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New Residential Construction Source: Census Bureau
Manufacturing and Trade Inventories and Sales Source: Census Bureau
Advance Monthly Sales for Retail and Food Services Source: Census Bureau
Trade Statistics (September 2024 & Fiscal Year April-September 2024 [Provisional]) Source: Ministry of Finance
Minutes of the Board’s discount rate meetings on September 9 and 18, 2024 Source: Federal Reserve