USD/JPY – Surging Dollar Breaks Above 121

USD/JPY has posted modest losses on Monday, as the pair has moved above the 121 line. The currency finds itself at its lowest level since July 2007. On the release front, Japanese GDP contacted by 0.5% in Q3, short of expectations. Monday’s events include the Final GDP Price Index and Economy Watchers Sentiment. In the US, today’s sole event is the Labor Market Conditions Index, a new economic indicator which the Federal Reserve introduced in October.

The Japanese yen continues its swoon, as USD/JPY broke above the psychologically important 120 level on Friday. This line had held firm since July 2007. The economy is in trouble, as Final GDP contracted in the third quarter by 0.4%. The second quarter reading was downgraded to -1.9%, compared to the original forecast of -1.6%. There was better news from Current Account, as the surplus continued to JPY 0.95 trillion, well above the estimate of JPY 0.46 trillion.

US employment data stole the show on Friday, as Nonfarm Payrolls shot up to 321 thousand in November, stunning the markets which had expected a rise of 231 thousand. There was also a rise in wages, which translate into stronger inflation numbers. The unemployment rate held steady at 5.8%, matching the forecast. The excellent Nonfarm Payrolls should help allay concerns about whether the economy can weather a rate increase in 2015.

USD/JPY for Monday, December 8, 2014

USD/JPY December 8 at 13:25 GMT

USD/JPY 120.98 H: 121.69 L: 120.83

USD/JPY Technical

• USD/JPY has moved lower in the Asian and European sessions, breaking below support at 121.39 and coming close to 120.63.
• On the downside, 120.63 is under strong pressure and could break during the North American session. 119.93 is next.
• 121.39 has reverted to a resistance line as the yen has moved lower. 1.2218 is stronger.
• Current range: 121.39 to 122.18

Further levels in both directions:

• Below: 120.63, 119.93, 118.89, 117.94 and 116.66
• Above: 121.39, 122.18, 123.35 and 124.16

OANDA’s Open Positions Ratio

USD/JPY ratio is posting to gains in long positions on Monday. This is not consistent with pair’s movement, as the yen has posted gains. The ratio has a majority of long positions, indicative of trader bias towards the dollar moving higher.

USD/JPY Fundamentals

• 5:00 Japanese Economy Watchers Sentiment. Estimate 45.9 points. Actual 41.5 points.
• 15:00 US Labor Markets Conditions Index.
• 23:50 Japanese M2 Money Stock. Estimate 3.2%.

Key releases are highlighted in bold

*All release times are GMT

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