USD/JPY – Yen Strengthens on Weak US PMI Report

USD/JPY has weakened on Thursday, as the pair trades at 122.70 in the North American session. In economic news, Unemployment Claims almost matched the estimate, rising to 268 thousand. ISM Non-Manufacturing PMI slipped to 55.9 points, missing expectations. As well, Federal Reserve Chair Janet Yellen testifies before the Joint Economic Committee in Washington. There are no Japanese releases on Thursday.

US employment data has looked solid this week, with a strong surge from ADP Nonfarm Payrolls. The key indicator climbed to 217 thousand, easily beating the estimate of 191 thousand. This marked a sharp rebound from the previous release of 182 thousand. On Thursday, Unemployment Claims came in just a shade below the forecast, rising to 268 thousand, compared to last week’s reading of 260 thousand. The employment event parade concludes on Friday, with the official Nonfarm Payrolls report. The markets are braced for a strong downturn, with an estimate of 201 thousand. With the markets abuzz over continuing speculation about a rate hike later in the month, these employment releases will be under the market microscope and could result in volatility on the currency markets.

US PMIs, key gauges of economic activity, have not had a particularly good week. On Tuesday, ISM Manufacturing PMI slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction of the index since May 2013. Recent manufacturing releases were also soft, as the US manufacturing sector continues to struggle. There wasn’t any relief from ISM Non-Manufacturing PMI on Thursday, as the index slipped to 55.9 points, well short of the forecast of 58.1 points. This marked a six-week low for the indicator. The silver lining is that although the index took a hit in November, the reading was still above the 50 line, indicative of expansion.

USD/JPY Fundamentals

Thursday (Dec. 3)

  • 12:30 US Challenger Job Cuts. Actual -13.9%
  • 13:30 US Unemployment Claims. Estimate 269K. Actual 268K
  • 14:45 US Final Services PMI. Estimate 56.5 points. Actual 56.1 points
  • 15:00 US Fed Chair Janet Yellen Testifies
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 58.1 points. Actual 55.9 points
  • 15:00 US Factory Orders. Estimate 1.2%. Actual 1.5%
  • 15:30 US Natural Gas Storage. Estimate -22B
  • 18:10 US FOMC Member Stanley Fischer Speaks

Upcoming Key Events

Friday (Dec. 4)

  • 13:30 US Average Hourly Earnings. Estimate 0.2%
  • 13:30 US Nonfarm Employment Change. Estimate 201K
  • 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Thursday, December 3, 2015

USD/JPY December 3 at 18:50 GMT

USD/JPY 122.71 H: 123.56 L: 122.63

USD/JPY Technical

S3 S2 S1 R1 R2 R3
120.40 121.50 122.40 123.74 125.63 126.84
  • USD/JPY posted slight gains in the Asian and European sessions. The pair has reversed directions and posted sharp losses in the North American session.
  • 123.74 has strengthened in resistance.
  • 122.40 is under pressure as the yen has posted gains.
  • Current range: 122.40 to 123.74

Further levels in both directions:

  • Below: 122.40, 121.50, 120.40 and 118.53
  • Above: 123.74, 125.63 and 126.84

OANDA’s Open Positions Ratio

USD/JPY ratio continues to show a solid majority of in favor of long positions (57%), which is indicative of strong trader bias towards the pair continuing to move 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

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.