Japanese yen rises ahead of consumer data

The Japanese yen is in positive territory to kick off the new trading week. Currently, USD/JPY is trading at 110.08, down 0.54% on the day.

Consumer data expected to decline

The yen is brushing off from a miserable month of March, in which it lost 3.87%. This marked the yen’s worst monthly performance since November 2016. The US dollar has looked sharp in recent weeks, bolstered by higher US yields. The yen is particularly sensitive to rate differentials, so the currency has responded with sharp losses to higher US yields. Last week, USD/JPY rose to 110.96, its highest level in twelve months.

Japanese consumers are in a sour mood and have been holding tight to the purse strings. Retail Sales fell for a third successive month in February, with a reading of -1.5%. Investors are braced for further declines from Average Cash Earnings and Household Spending, at -0.5% and -5.0% respectively (23:30 GMT). If either indicator posts a sharper decline than expected, it could translate into losses for the yen.

On Friday, US nonfarm payrolls delivered in a big, big way, with a read of 916 thousand, up from 379 thousand a month earlier. This figure easily beat the forecast of 652 thousand. With the US recovery gaining traction and the Biden administration pouring trillions of dollars into the economy, we can expect upcoming NFP prints to be above the one million level. That assumes that there are no hiccups in the vaccine rollout, which has been successful so far. The US dollar didn’t show much reaction to the blowout release, and USD/JPY was practically unchanged on Friday.

There was more positive news as the US unemployment rate dropped from 6.2% to 6.0%, matching the forecast. Unemployment continues to fall and this was the lowest level since April 2020, prior to the huge jump in unemployment due to the Covid pandemic.

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USD/JPY Technical Analysis

• On the downside, there is support at 109.69. Below, there is support at 108.74
• There is resistance at 111.28, followed by resistance at 111.92

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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