FX.co ★ Demand for the yen will return in the near future

The Japanese yen is trading in a fairly narrow price range on the background of the closure of a number of markets in connection with the Easter weekend, which will continue today.

The data on the labor market also did not make any major changes in the technical picture. According to the report, unemployment in Japan in February 2018 was 2.5% after 2.4% in January. The demand for labor has slightly decreased. In February, there were 158 vacant jobs compared to 159 jobs in March. The main emphasis of the Japanese government is on the growth of salaries, which in the future will be able to spur consumer spending growth and inflation rates.

The industrial production in Japan increased in February. According to the official report, industrial production, in comparison with the previous month, grew by 4.1% after a monthly drop of 6.8% in January. Economists had expected growth of 5.0%.

Today, the report of the Bank of Japan Tankan was published in which it is indicated that the index of sentiments of major producers was at the level of 24 points, while the market expected 25 points. A slight deterioration in sentiment among major manufacturers is directly related to the actions of the US authorities. It is about US trade policy and trade duties, which may partially affect a number of economic indicators.

As for the technical picture of the currency pair USD / JPY, then, most likely, in the short term, the demand for the Japanese yen as an asset will return. The trade war, which the US is gradually making, will not go anywhere, but will only gain momentum, despite all the talk about the cancellation of duties and political appeals of the leaders of several countries to the administration of the White House.

A breakthrough of support at 106.10 will lead to a larger sale of the US dollar in the 105.40 area, and then to the renewal of the lows last month in the 104.70 area. In the case of active demand for the US dollar, the upside potential will be limited to the resistance level of 107.80, from which I recommend selling the trading instrument.

The raw currencies ignored the data on activity in the manufacturing sector of China, which in March, although it grew very slowly. According to a report by private research company Caixin, the final index of supply managers for the manufacturing sector in China was 51.0 points in March, compared to 51.6 points in February.

The official data was slightly different. They pointed to the growth of the production index to 51.5 points from 50.3 points in February.

Returning to the question of the trade war between the US and China, it should be noted that the surplus of the current account of China's balance of payments in 2017 amounted to 164.9 billion US dollars, and the surplus of the financial account - 148.6 billion US dollars.