USD/JPY firmly above 105 as Japanese PPI and machine data disappoint.

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The USD/JPY pair is firmly above 105.00 as traders respond to Japan’s machinery orders and PPI numbers.
The core machinery orders rate fell 4.4% in September, resulting in an annual decline of 11.5%.
The PPI fell 0.2% in October, resulting in an annual decline of 2.1%.

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

USD/JPY One-Hour Chart
Decline in orders for machines in Japan

Japan is a well-known manufacturer of machinery used in all sectors of the world economy such as mining, agriculture and construction. In 2019, the country exported machinery worth more than 137 billion US dollars. This made it the second largest exporter of vehicles.

Therefore, investors pay very close attention to the monthly order figures for machinery. According to the Cabinet Office, the most important orders for machinery fell by 4.4% in September, after increasing by 0.2% in the previous month. This was the first time in three months that orders fell. As a result, orders fell at an annualized rate of 11.5%, better than the consensus estimate of 11.6%.

Office data showed that private sector orders, excluding the volatile shipping and electrical companies, were down 4.4%. Government orders increased by 20%, while those from overseas markets fell by 16.7%.

Further data from the Bank of Japan (BOJ) showed that the Producer Price Index fell by 0.2% in October after falling 0.2% the previous month. Prices fell at an annualized rate of 2.1%, indicating 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 in sight

The USD/JPY will later react to inflation data from the United States. Figures released by the US Bureau of Statistics will be released at 13:30 GMT. Analysts surveyed by Reuters expect the figures to show that consumer prices rose by 0.1% in October. This will be slightly lower than the 0.2% of the previous month.

On an annualized basis, they expect the consumer price index to rise by 1.3%, compared to a 1.4% increase in September.

The analysts also expect the core consumer price index, which excludes volatile food and energy prices, to rise by 0.2% on a monthly basis and by 1.8% on an annual basis.

Technical outlook for USD/JPY
USD/JPY technical table

The USD/JPY pair is trading at 105.30, which is above this week’s low of 103.16. On the daily chart, the price is located between the middle and upper lines of the Bollinger Bands. It is also located along the upper line of the descending trading range, which is shown in pink. The pair also appears to be forming a bullish pennant pattern, indicating that it may continue to rise, with the next target price at 106.00. Are you a new trader? Take advantage of our free forex courses to get started.

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