The USD/JPY is holding above 108–will today’s NFPs change this?
Despite the recent developments in the Middle East since the US Pentagon launched an airstrike that killed Iranian commander Soleimani, stoking fears that a war between the US and Iran could be in the near future, the overall picture in the USD/JPY didn't substantially change.
With no sustainable risk-off hitting the market and volatility staying all in all quite low, a sustainable drop below 108.00 wasn't seen, in fact the USD/JPY is currently trading back above 109.00 and in positive territory for the week.
Whether this will change or not is not only dependent on the developments in regards to the US and Iran, but also dependent on today's Non-Farm Payroll data set which will be published at 1330 GMT.
The consensus for December lies at 164,000, after NFPs increased by 266,000 in November 2019. Main driver for the solid print in December was certainly the strong number from the manufacturing sector, reflecting the return of workers from a GM strike. But given the latest ISM Employment numbers and without striking workers returning, this month's NFPs could likely disappoint.
If so and expectations of market participants of at least one 25 basis point cut in 2020 keep on increasing significantly above 70% (currently and according to the Fed Watch Tool we see a likelihood of ~60%), the USD/JPY could see another drop down to 108.00.
In general, we still consider the USD/JPY an attractive short candidate from a risk-reward perspective midterm.
Technically, the main focus stays on 106.80/107.00, where, from a technical perspective, a break lower could result in a drop as low as 105.00 and probably even lower.
On the other hand: a push above 110 activates 110.70, playing into the cards of USD/JPY bulls, at least short-term.
Ready to take your trading to the next level? Find out how in Admiral Markets’ new webinar series Trading Spotlight, where our trading experts will be discussing risk management, trading psychology, and their top strategies for trading the world’s most popular markets - admiralmarkets.com/education/webinars/trading-spotlight-1
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
With no sustainable risk-off hitting the market and volatility staying all in all quite low, a sustainable drop below 108.00 wasn't seen, in fact the USD/JPY is currently trading back above 109.00 and in positive territory for the week.
Whether this will change or not is not only dependent on the developments in regards to the US and Iran, but also dependent on today's Non-Farm Payroll data set which will be published at 1330 GMT.
The consensus for December lies at 164,000, after NFPs increased by 266,000 in November 2019. Main driver for the solid print in December was certainly the strong number from the manufacturing sector, reflecting the return of workers from a GM strike. But given the latest ISM Employment numbers and without striking workers returning, this month's NFPs could likely disappoint.
If so and expectations of market participants of at least one 25 basis point cut in 2020 keep on increasing significantly above 70% (currently and according to the Fed Watch Tool we see a likelihood of ~60%), the USD/JPY could see another drop down to 108.00.
In general, we still consider the USD/JPY an attractive short candidate from a risk-reward perspective midterm.
Technically, the main focus stays on 106.80/107.00, where, from a technical perspective, a break lower could result in a drop as low as 105.00 and probably even lower.
On the other hand: a push above 110 activates 110.70, playing into the cards of USD/JPY bulls, at least short-term.
Ready to take your trading to the next level? Find out how in Admiral Markets’ new webinar series Trading Spotlight, where our trading experts will be discussing risk management, trading psychology, and their top strategies for trading the world’s most popular markets - admiralmarkets.com/education/webinars/trading-spotlight-1
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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