The USD/JPY exchange rate dipped 0.41% to an intraday low of 119.55 yen per dollar on Tuesday, after China’s General Administration of Customs said in Beijing that Chinese exports fell 3.7%, in U.S. dollar terms, in September from a year earlier, following a 5.5% drop in August. Imports in September fell 20.4% from a year earlier, compared with a 13.8% decrease in August. The trade surplus increased slightly to $60.3 billion in September, from $60.2 billion in August.

HSBC analyst Ma Xiaoping told The Wall Street Journal that exports in September look a little better than expectations, but she doesn’t see much improvement in global demand. Following the announcement of weak economic data from China, currency traders sold the British pound, U.S. dollar and euro, and bought the Japanese yen as a safe-haven trade. 

The yen has been steady against the dollar in the past several weeks despite the bad economic news from Japan that was piling up. Japan's Cabinet Office said last Thursday that core machinery orders, excluding those from electric power companies and those for ships, tumbled 5.7% month-on-month in August to 579.4 billion yen, missing the forecast of a 2.7% increase. Machinery orders, which are widely regarded as a leading indicator of corporate capital investment, have been on the decline for a third straight month.

The global financial firm Markit, said in late September that the flash Nikkei Manufacturing PMI for Japan came in at 50.9 for September, down from 51.7 in August, the lowest in three months. The Nikkei Japan PMI reading fell short of the median analysts' forecast of 51.2. A reading above 50 indicates expansion in the sector while a reading below 50 shows contraction.

Minutes from the U.S. Federal Reserve’s September 16-17 policy meeting, released on Thursday, didn’t help much either to move the Japanese yen one way or the other against the U.S. dollar. The federal funds futures, traded on the Chicago Mercantile Exchange (CME) and commonly used to estimate the market’s views on the likelihood of changes in U.S. monetary policy, indicate only 8% odds for a quarter-point rate hike at the October 28 policy meeting, while the odds are 37% at the December 16 meeting, according to data from CME Group as of October 13.

As of October 6, there are 64,945 short positions of Japanese yen, traded on the Chicago Mercantile Exchange (CME) in units of 12,500,000 Japanese yen, by leveraged funds, an increase of 116 contracts since last week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) each Friday. This is compared to about 28,235 long positions, a decrease of 1,675 contracts during the same period. The net short positions have increased by 1,791 contracts, worth about 22.4 billion yen, reflecting indecisive sentiment for the USD/JPY.

From a short-term technical viewpoint, the USD/JPY has been moving in a symmetrical triangle chart pattern as traders can’t decide in which direction the Japanese yen will move next. The currency pair was also unable to break out the 120.50 yen per dollar level, or the 61.8% Fibonacci retracement, despite the bad economic data from Japan and if the U.S. Federal Reserve’s decision to delay the first rate hike further until December, or early next year, is a reality. From the chart pattern, the USD/JPY could, sooner rather than later, break down if the demand for the yen as a safe-haven currency rises.