The Japanese yen is drifting in the Monday session. In North American trade, USD/JPY is trading at 108.67, up 0.05%.
The yen has posted four winning weeks out of the past five, as the US dollar continues to struggle. Still, the US/Japan rate differential continues to support USD/JPY, which remains in no man’s land slightly below the 109 level.
Japan will release Household Spending (GMT 23:30), and the consumer spending indicator is expected to rebound after two straight declines of 6.1% and 6.6%. The March release is projected to show a gain of 1.7%, which would mark a five-month gain.
US Nonfarm Payrolls miss badly
The market was gearing up for a blowout party from US nonfarm payrolls on Friday. In the end, however, the economy created just 266 thousand jobs, nowhere near the estimate of 990 thousand. There were expectations that NFP would break above the one-million mark, and some analysts even projected a reading above the two-million mark. The unemployment rate rose to 8.1%, up from 7.8%.
Still, the news was not all bad, as wage growth rebounded with a strong gain of 0.7%, after a read of -0.1% beforehand. The US economy remains in good shape, and investors are unlikely to let a weak NFP report ruin optimism over the economy.
The Fed has maintained a dovish stance, even with the economy posting strong numbers. The disappointing nonfarm payroll report appears to have justified the Fed’s position, but investors will be keeping a close eye on this week’s inflation numbers. A sharp rise in inflation could renew calls for the Fed to consider tapering. On the other hand, if the upcoming inflation numbers are weaker than expected, there will be less pressure on the Fed to change its accommodative policy.
- USD/JPY is facing resistance at 109.42. Above, there is resistance at 110.24
- On the downside, there is support at 108.06 and 107.52
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