USD/JPY – Little Change As ADP Non-Farm Payrolls Plummets

USD/JPY has edged higher in Wednesday trading. The pair is trading in the low-98 range early in the North American session. In economic news, ADP Non-Farm Payrolls slumped to a six-month low, as US employment numbers continue to disappoint. The Federal Reserve will release a statement later today, and that could cause some volatility in the markets. In Japan, Preliminary Industrial Production rose nicely in September but fell short of the estimate. Manufacturing PMI will be released later on Wednesday.

The Federal Reserve winds up a policy meeting on Wednesday, its first since Congress hammered out an agreement on the debt ceiling and reopened the government. However, the agreement is little more than a band-aid solution which has pushed off the debt ceiling and budget deadlock for a few months, without resolving these two issues. Meanwhile, recent US data, notably employment numbers, have been sluggish. Given this situation, the Fed is unlikely to push the taper trigger until early 2014. The markets will be waiting for the Fed policy statement later today, and we could see some volatility in the currency markets afterwards.

US employment numbers continue to sag, and the bad news continued on Wednesday with the ADP Non-Farm Payrolls report.  The key indicator tumbled from 166 to 130 thousand, way off the estimate of 151 thousand. This was the weakest reading since April and points to a weak labor market. Last week, Unemployment Claims came in above the estimate and Non-Farm Payrolls tumbled to a six-month low.

In the US, the grim readings continued on Tuesday. PPI and Retail Sales both declined by 0.1%, missing the estimate of 0.2%. CB Consumer Confidence dropped sharply, from 79.7 to 71.2 points, a six-month low. This was well short of the estimate of 75.7 points. Core Retail Sales managed to match the forecast, rising to 0.4%. The mostly weak figures come on the heels of dismal housing numbers on Monday. If confidence in the US economy starts to weaken, we could see the dollar, which is already under pressure from the major currencies, continue to lose ground.

USD/JPY for Wednesday, October 30, 2013

USD/JPY October 30 at 15:15 GMT

USD/JPY 98.22 H: 98.30 L: 98.08

USD/JPY Technical

• USD/JPY is showing little movement in Wednesday trading, as the pair trades in the low-98 range.
• On the downside, 98.15 has reverted to a support role. It is a weak line and could fall if the yen shows any upward movement. This is followed by strong support at 97.18.
• On the upside, the pair is facing resistance at 98.92. This line is followed by the key level of 100, which has held firm since mid-September.
• Current range: 98.15 to 98.92

Further levels in both directions:

• Below: 98.15, 97.18, 96.00, 95.06 and 94.20
• Above: 98.92, 100, 101.19 and 102.53

OANDA’s Open Positions Ratio

USD/JPY ratio continues to point to movement towards long positions in Wednesday trading. This is not reflected in the movement of the pair, which is almost unchanged. The ratio continues to be dominated by long positions, indicative of a strong trader bias towards the US dollar moving higher.

All eyes are on the FOMC statement later on Wednesday, and USD/JPY will likely remain in a holding pattern until this key release.

USD/JPY Fundamentals

• 12:15 US ADP Non-Farm Employment Change. Estimate 151K. Actual 130K.
• 12:30 US Core CPI. Estimate 0.2%. Actual 0.1%.
• 12:30 US CPI. Estimate 0.2%. Actual 0.2%.
• 14:30 US Crude Oil Inventories. Estimate 1.9M.
• 18:00 US FOMC Statement.
• 18:00 US Federal Funds Rate. Estimate <0.25%.
• 23:15 Japanese Manufacturing PMI.

*Key releases are highlighted in bold

*All release times are GMT

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