USD/JPY – Japanese yen climbs on market jitters

The Japanese yen has posted considerable ground in the Thursday session. In North American trade, USD/JPY is trading at 112.40, down 0.66% on the day. In economic news, U.S. employment numbers were soft. ADP nonfarm payrolls plunged to 179 thousand, well off the estimate of 196 thousand. This was the lowest level since May. Unemployment claims edged lower to 231 thousand, but this was higher than the estimate of 226 thousand. There was better news from the services sector, as ISM Non-Manufacturing PMI improved to 60.7, easily beating the estimate of 59.1 points. On Friday, the U.S. releases wage growth and nonfarm payrolls. In Japan, household spending is expected to rebound and gain 1.2%, while average cash earnings are forecast to tick lower to 1.0%. On Friday, the U.S releases wage growth and nonfarm payrolls.

Global markets continue to spiral downward on Thursday, in what has been a dismal week for equities. Investor optimism over a 90-day truce between the U.S. and China, in which the U.S has agreed to suspend any new tariffs, quickly dissipated. Another concern for investors is an inverted yield curve of U.S Treasuries, which in the past has been a reliable indicator that a recession is coming. Investor jitters have boosted the Japanese yen, as investors have snapped up safe-haven assets like the yen.

A detente in the U.S-China trade war cannot come soon enough for the Japanese economy, as key sectors of the economy are showing signs of weakness. Japan’s manufacturing sector slowed down in November, raising concerns about the strength of the economy. Manufacturing PMI slipped to 52.2, down from 52.9 in October. The ongoing global trade war is a primary factor in the weak reading, as Japanese companies which export to the U.S. or China have been hurt by higher tariffs. A weaker eurozone economy has led to softer European demand for Japanese exports. Making matters worse, domestic demand remains fragile, as nervous consumers continue to hold tightly onto their purse strings.

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USD/JPY Fundamentals

Thursday (December 6)

  • All Day – OPEC Meetings
  • 7:30 US Challenger Job Cuts. Actual 51.5%
  • 8:15 US ADP Nonfarm Employment Change. Estimate 196K. Actual 179K
  • 8:30 US Revised Nonfarm Productivity. Estimate 2.3%. Actual 2.3%
  • 8:30 US Revised Unit Labor Costs. Estimate 1.1%. Actual 0.9%
  • 8:30 US Trade Balance. Estimate -55.2B. Actual -55.5B
  • 8:30 US Unemployment Claims. Estimate 226K. Actual 231K
  • 9:45 US Final Services PMI. Estimate 54.4. Actual 54.7
  • 10:00 US Factory Orders. Estimate -1.9%. Actual -2.1%
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 59.2. Actual 60.7
  • 11:00 US Crude Oil Inventories. Estimate -1.3M
  • 12:15 US FOMC Member Bostic Speaks
  • 18:30 Japanese Household Spending. Estimate 1.2%
  • 18:30 US FOMC Member Williams Speaks
  • 18:45 US Federal Reserve Chair Powell Speaks
  • 19:00 Japanese Average Cash Earnings. Estimate 1.0%

Friday (December 7)

  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 200K
  • 8:30 US Unemployment Rate. Estimate 3.7%
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 97.1

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, December 6, 2018

USD/JPY December 6 at 10:45 EST

Open: 113.19 High: 113.21 Low: 112.28 Close: 112.40

USD/JPY Technical

S3 S2 S1 R1 R2 R3
110.28 111.20 112.30 113.75 114.73 115.50

USD/JPY posted considerable losses in the Asian session. The pair moved higher in European trade but then retracted and gave up much of those losses.  USD/JPY continues to lose ground in North American trade

  • 112.30 was tested in support earlier. It remains a weak line
  • 113.75 is the next resistance
  • Current range: 112.30 to 113.75

Further levels in both directions:

  • Below: 112.30, 111.20 and 110.28
  • Above: 113.75, 114.73, 115.50 and 116.55

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.