USD/JPY – Yen Touches 122, US Jobless Claims Disappoints

USD/JPY has posted small gains on Thursday, as the pair trades at 121.60 in the North American session. In economic news, US Unemployment Claims rose to 276, missing expectations.We’ll also hear from three key FOMC members during the day. On Friday, we’ll get a look at a key market-mover, US Nonfarm Payrolls. 

Last week’s US unemployment claims disappointed, as the key indicator jumped to 276 thousand, way above the forecast of 263 thousand. This marked a 5-week high. Still, recent jobless claim releases point to close to full employment, and these types of positive readings are important ammunition for Fed members who are in favor of a rate hike. The markets will now focus on Nonfarm Payrolls, which will be released on Friday. NFP is expected to rise sharply to 173 thousand, so the dollar could be a big winner if the indicator meets expectations.

In Japan, the BOJ released the minutes of its October policy meeting. Policymakers expressed concern about the slowdown in China, as a decrease in demand from the Asian giant has hurt the Japanese export sector. The BOJ also noted that low oil prices could delay inflation from reaching the target of 2.0%. Policymakers voted 8-1 to maintain the current monetary stance, but the BOJ may be forced to act and increase monetary easing if inflation remains low and domestic and global demand do not improve soon. Given the weak economy and pressure on the BOJ, the yen will have a tough time holding its own against the US dollar.

Wednesday was a positive day for US releases, and the dollar responded with modest gains against the yen. ADP Nonfarm Payrolls, which precedes the official Nonfarm Payroll report, came in at 182 thousand, very close to the forecast but well off last month’s reading of 200 thousand. The September US trade deficit narrowed to $40.8 billion, its lowest level since February. There was more good news from the ISM Non-Manufacturing PMI, which jumped to 59.1 points, easily beating the estimate of 56.6 points.

USD/JPY Fundamentals

Thursday (Nov. 5)

• 00:30 FOMC Member Stanley Fischer Speaks
• 3:45 Japanese 10-year Bond Auction. Estimate 0.32%
• 12:30 US Challenger Job Cuts. Actual -1.3%
• 13:30 US Unemployment Claims. Estimate 263K. Actual 276K
• 13:30 FOMC Member William Dudley Speaks
• 13:30 US Preliminary Nonfarm Productivity. Estimate 0.1%. Actual 1.6%
• 13:30 US Preliminary Unit Labor Costs. Estimate 2.2%. Actual 1.4%
• 14:10 FOMC Member Stanley Fischer Speaks
• 15:30 US Natural Gas Storage. Estimate 60B Actual 52B
• 18:30 FOMC Member Dennis Lockhart Speaks

Upcoming Key Releases

Friday (Nov. 6)

• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Charge. Estimate 179K
• 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

USD/JPY for Thursday, November 5, 2015

USD/JPY November 5 at 15:35 GMT

USD/JPY 121.70 H: 122.00 L: 121.38

USD/JPY Technical

• 121.50 has switched to a support role as the yen continues to soften.
• 122.40 is an immediate resistance line.
• Current range: 121.50 to 123.74

Further levels in both directions:

• Below: 121.50, 120.40, 118.53 and 116.90
• Above: 122.40, 123.74 and 125.63

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged, as long positions retain a slight majority (53%). This is indicative of slight trader bias towards the pair continuing to move to higher ground.

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.