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USD/JPY – US jobs data a setback but no game changer

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  • US NFP 216,000 (170,000 expected, 173,000 in November revised down from 199,000)
  • Average hourly earnings (MoM) 0.4% (0.3% expected, 0.4% in November)
  • USDJPY rebounds off key Fibonacci level

The first US jobs report of the year was an early reminder to investors that things don’t always go their way, despite the experience of the last couple of months.

Whether it was just exuberant festive cheer or something more, investors bounced into the end of 2023 full of hope that not only is the tightening cycle behind us, but 2024 will be the year of the soft landing and more rate cuts than you can count on one hand.

That may be proven to be correct, perhaps even not bullish enough, but it was going to be tough to sustain that positioning and build upon it early in the new year. We effectively needed all of the economic indicators to fall kindly from the off which was a big ask.

Today has, along with the FOMC minutes on Wednesday, brought an early setback. But I don’t think either ultimately changes anything as far as the rest of the year is concerned. The labor market is still slowing gradually and while wages were a little stronger, the broader trend remains very promising.

Perhaps that would explain the response in the markets, with the dollar initially spiking as the report dropped before giving back those gains to trade lower than it did pre-release. US yields also reversed the initial gains while gold hit a new high for the day. None of this suggests traders are suddenly worried.

A sign of exhaustion in USDJPY?

The pair was already looking a little jaded during the most recent rally and on approach to a potentially important resistance level and it’s here that it ran into trouble.

USDJPY 4-Hour

Source – OANDA

The 50% Fibonacci retracement level combined with the 200/233-period simple moving average band to create a barrier for the price which then trended much lower on the back of the ISM services PMI.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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