USD/JPY – Yen Subdued as Markets Eye US Payrolls, Wage Growth

USD/JPY is almost unchanged on Friday, as the pair trades at 113.60. On the release front, the spotlight is on US employment numbers, with three key releases – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate. There are no Japanese events on Friday. Traders should be prepared for some volatility in the currency markets during the North American session.

November was a dismal month for the yen, as the US dollar ran roughshod over the Japanese currency. USD/JPY surged 9.4 percent, as the yen dropped to 10-month lows. The dollar has been a tear since the election of Donald Trump and the expected rate hike by the Federal Reserve this month could extend the misery of the struggling Japanese yen. Japanese policymakers are not unhappy about the sliding yen, which has given a boost to the weak export sector.

The spotlight is on Friday’s US employment reports. The US labor market has been red-hot and is close to capacity. Solid job numbers have boosted market expectations for a rate hike next week, which is considered a virtual certainty (the markets have priced in a rate hike at over 90%). Traders will want to keep a close eye on today’s indicators, as any unexpected readings can have a sharp impact on the currency markets. We could see mixed numbers, with Nonfarm Payrolls expected to improve to 177 thousand, while Average Hourly Earnings, which measure wage growth, is expected to dip to 0.2%. On Thursday, unemployment claims were unexpectedly high, climbing up to 268 thousand, the highest level since July. Still, the 4-week averages continue to point to very low levels for jobless claims.

NFP Still Important Despite Upcoming Rate Hike

USD/JPY Fundamentals

Friday (December 2)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 177K
  • 8:30 US Unemployment Rate. Estimate 4.9%
  • 8:45 US FOMC Member Lael Brainard Speech
  • 3:00 US FOMC Member Daniel Tarullo Speech

*All release times are EST

*Key events are in bold

USD/JPY for Friday, December 2, 2016

USD/JPY December 2 at 5:30 EST

Open: 113.89 High: 114.14 Low: 113.57 Close: 113.86

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.24 111.45 112.48 113.86 114.13 115.45
  • USD/JPY has posted slight losses in the Asian and European sessions
  • 112.48 is providing support
  • 113.86 is a fluid line. Currently it is a weak resistance line
  • Current range: 112.48 to 113.86

Further levels in both directions:

  • Below: 112.48, 111.45 and 110.24
  •  Above: 113.86, 114.13, 115.45 and 116.88

OANDA’s Open Positions Ratio

USD/JPY ratio is showing considerable movement towards short positions. Currently, short positions have a strong majority (60%), indicative of trader bias towards USD/JPY continuing to move lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.