USD/JPY – Dollar Pushes Above 102 Ahead of Non-Farm Payrolls

USD/JPY is steady in Friday trading, after posting gains on Thursday. The pair is trading just above the 102 line in the European session. In the US, Unemployment Claims rebounded nicely and came in below the estimate. Today’s highlight is the Non-Farm Employment Change, which will be released together with the Unemployment Rate. In Japan, Friday’s sole release is Leading Indicators, which matched expectations.

The highlight of the week is the (official) Nonfarm Employment Change, which will be released later on Friday, together with the Unemployment Rate. Earlier this week, ADP Non-Farm Employment Change disappointed badly, sliding to 175 thousand in January, compared to 238 thousand a month earlier. This was well shy of the estimate of 191 thousand. Is the ADP release a prelude to grim tidings from Non-Farm Payrolls on Friday? If the NFP falters as well, the Fed could delay its next QE taper and the fallout from such a negative message could hurt the US dollar. This key release could dictate whether the Federal Reserve goes ahead with a third QE taper in February. The Federal Reserve has scaled down its bond-buying scheme with two tapers of $10 billion, reducing QE to $65 billion each month. The Fed would like to terminate the scheme by the end of 2014.

Meanwhile, there was also good news on the US employment front this week, as Unemployment Claims dropped to 331 thousand, beating the estimate of 337 thousand. As well, ISM Non-Manufacturing PMI, a key event, improved in the January release. The index came in at 54.0 points, up from 53.0 a month earlier. This was slightly above the estimate of 53.6 points. US manufacturing numbers continue to slip, however, as the ISM Manufacturing PMI dropped sharply and sagged to a seven-month low.

USD/JPY for Friday, February 7, 2014

USD/JPY February 7 at 10:05 GMT

USD/JPY 102.14 H: 102.23 L: 101.92

USD/JPY Technical

• USD/JPY is showing weak movement on Friday. The pair has been trading close to the 102 line in the Asian and European sessions.
• The pair is facing resistance at 102.53. This is not a strong line and could face pressure if the dollar posts further gains. 103.30 is the next line of resistance.
• On the downside, 101.19 has some breathing room as the pair trades above the 102 line. Next is the key level of 100.00, which has remained intact since November.
• Current range: 101.19 to 102.53

Further levels in both directions:

• Below: 101.19, 100.00, 99.57 and 98.65
• Above: 102.53, 103.30, 104.17, 105.70, 106.85

OANDA’s Open Positions Ratio

USD/JPY ratio is unchanged in Friday trading, continuing the trend we have seen for most of the week. This is consistent with what we are seeing from the pair, which is not showing much movement on Friday. Long positions continue to comprise a solid majority in the USD/JPY ratio, indicating trader bias towards the dollar breaking out and moving to higher ground.

It’s been a quiet Friday for the yen, but traders should expect stronger movement in the North American session, as the US releases the all-important Nonfarm Payrolls as well as the Unemployment Rate later in the day.

USD/JPY Fundamentals

• 5:00 Japanese Leading Indicators. Estimate 111.9%. Actual 112.1%.
• 13:30 US Nonfarm Employment Change. Estimate 185K.
• 13:30 US Unemployment Rate. Estimate 6.7%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 20:00 US Consumer Credit. Estimate 12.4B.

*Key releases are highlighted in bold

*All release times are GMT

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.