USD/JPY – Yen Yawns After Mixed US Employment Data

USD/JPY is showing little movement at the start of the week. Currently, the pair is trading at 112.50. On the release front, Japanese Average Cash Earnings edged lower to 0.1%, shy of the forecast of 0.4%. In the US, there are no major events on the calendar. On Tuesday, the US releases JOLTS Job Openings, with the indicator expected to rise to 5.56 million.

On Friday, US job numbers were mixed. Nonfarm payrolls jumped to 227 thousand, well above the estimate of 170 thousand. However, wage growth disappointed, as Average Hourly Earnings slipped to 0.1%, short of the forecast of 0.3%. There’s no arguing that the US economy is performing well, but there is a sense of uneasiness in the markets as Donald Trump continues to create controversy and dissent both at home and abroad. Trump has picked a fight with Mexico and his travel ban on Moslems from seven countries has created a strong backlash. Moreover, the lack of an economic policy is a major source of concern and the the post-election euphoria which sent the markets higher appears to have dissipated. The Federal Reserve is no less in the dark than the rest of us, and is expected to adopt a wait-and-see attitude in the coming months. If the economy continues to grow, there is a strong likelihood of another rate hike in the first half of 2017, which is bullish for the dollar.

U.S Payrolls Increase +227,000, Wage Growth Weakens

Market Seeks Rate Clarity, Dollar Drifts

Just a couple of weeks into his presidency, President Donald Trump has not hesitated to spat with US trading partners. Last week it was the turn of Japan, as Trump accused Japan of currency devaluation in order to gain an unfair trade advantage from a weaker yen. Japan flatly denied the claim of currency manipulation, saying that Japan’s monetary policy was aimed at curbing deflation and not lowering the value of the yen. Trump and Japanese Prime Minister Shinzo Abe will meet in Washington on February 10, and it’s a sure thing that currency policy will be high up the list on the agenda of the meeting. The BoJ sent off its own warning about currency manipulation when the dollar pushed above the 120 level, but BoJ Governor Haruhiko Kurodo recently stated that the bank does not have a target for the currency. It’s a safe bet that we haven’t seen the last of the war of words between the US and Japan with regard to currency policy.

USD/JPY Fundamentals

Sunday (February 5)

  • 7:00 Japanese Average Cash Earnings. Estimate 0.4%. Actual 0.1%

Monday (February 6)

  • 10:00 US Labor Market Conditions Index
  • Tentative – US Loan Officer Survey

Tuesday (February 7)

  • 10:00 US JOLTS Job Openings. Estimate 5.56M

*All release times are GMT

*Key events are in bold

USD/JPY for Monday, February 6, 2017

USD/JPY February 6 at 6:45 EST

Open: 112.64 High: 112.78 Low: 112.21 Close: 112.46

USD/JPY Technical

S3 S2 S1 R1 R2 R3
109.85 109.85 110.94 112.57 113.80 114.83

USD/JPY edged higher in the Asian session. In European trade, the pair posted slight gains but then retracted

  • 110.94 is providing support
  • 112.57 was tested in resistance and is a weak line
  • Current range: 110.94 to 112.57

Further levels in both directions:

  • Below: 110.94, 109.85 and 108.61
  •  Above: 112.57, 113.80, 114.83 and 115.90

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in the Monday session. Currently, long positions have a majority (55%), indicative of trader bias towards USD/JPY reversing directions and climbing higher.

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.