USD/JPY – Yen Shrugs Off Strong Wages Report

The Japanese yen is listless on Wednesday. In the European session, USD/JPY is trading in the mid-117 range. On the release front, Japanese Average Cash Earnings posted a strong gain of 1.6%. In the US, there are two key releases on the calendar – ADP Nonfarm Employment Change and ISM Non-Manufacturing PMI.

In Japan, Average Cash Earnings rebounded in December, posting a strong gain of 1.6%. This marked a 5-month high, and points to stronger spending by the Japanese consumer. This was the only major event out of Japan this week, so US releases will have a magnified impact on the direction of USD/JPY.

US employment numbers will be in the spotlight for the remainder of the week, led by ADP Nonfarm Employment later on Wednesday. The markets are expecting the indicator to soften in the January report. The estimates for Unemployment Claims and the official Nonfarm Employment Change also call for weaker readings. If the forecasts prove correct that the labor market has started off 2015 on a weak note, we could see the dollar lose ground against its major rivals.

USD/JPY for Wednesday, February 4, 2015

USD/JPY February 4 at 12:10 GMT

USD/JPY 117.66 H: 118.00 L: 117.47

USD/JPY Technical

• USD/JPY posted gains in the Asian session but then retracted. The pair is unchanged in the European session.
• 117.49 remains under pressure in support. 116.69 is stronger.
• 118.69 is a strong resistance line.
• Current range: 117.49 to 118.69

Further levels in both directions:

• Below: 117.49, 116.69, 115.56, 113.64 and 112.41
• Above: 118.69, 119.83, 120.63 and 121.69

OANDA’s Open Positions Ratio

USD/JPY ratio is showing gains in short positions on Wednesday, continuing the trend seen a day earlier. This is consistent with the pair’s movement, as the yen has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards the US dollar moving to higher ground.

USD/JPY Fundamentals

• 1:30 Japanese Average Cash Earnings. Estimate 1.6%. Actual 1.6%.
• 13:15 US ADP Non-Farm Employment Change. Estimate 224K.
• 14:45 US Final Services PMI. Estimate 54.3 points.
• 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points.
• 15:30 US Crude Oil Inventories. Estimate 4.0M.

*Key releases are highlighted in bold

*All release times are GMT

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