USD/JPY: sticky below the 114 handle and exporter territory, soggy equities

Currently, USD/JPY is trading at 113.86, down -0.12% on the day, having posted a daily high at 114.04 and low at 113.83.

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USD/JPY is struggling at the 114 handle with exporters potentially locking in their future treasury requirements on the recent strength of the greenback and Japans fiscal year end a busy time for treasury managers dealing in the markets. The Yen has otherwise been benefiting with the cautious tone on Wall Street with respect to equities. Investors are somewhat nervous ahead of this week's big data in the jobs sector from the US and next week's FOMC meeting. 

Japanese data: Japan GDP for Q4 2016, final: +0.3% q/q (expected +0.4%)

It is unclear what a strong dollar and higher rates will equate to in equities overall, but it is certainly a negative outcome for corporates with offshore earnings and exporters.  The US 10yr treasury yields rose from 2.49% to 2.51% overnight supporting the greenback while the 2yr yields rose from 1.31% to 1.33%. Market pricing for a March hike firmed slightly, April Fed fund futures at 0.87% implying almost a 100% chance of a rate hike in March, and this theme will continue to support dollar strength on the basic divergence between the BoJ, the Fed and yield spreads. 

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USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet noted the technical picture." From a technical point of view, the 4 hours chart shows that the price has held above its 100 and 200 SMAs that anyway remain flat, converging in the 113.30 regions, while technical indicators lack directional strength, flat within neutral territory, reflecting the quietness around the pair. Support levels: 113.50, 113.25 and 112.90. Resistance levels: 114.55, 114.95 and 115.30."