- USD/JPY is sticking to the start of the week’s ranges as markets get set for the non-farm payrolls later in the week.
- USD/JPY is currently trading at 111.34, having travelled between a range of 111.24 and 111.45.
USD/JPY pierced the 111.20 resistance at the start of the week and has found demand right into the midpoint of the handle on optimism over Sino/US trade talks along with an improvement in Chinese manufacturing.
US yields have also hit a 1 week high while stock markets burst up to fresh territory, sinking the yen to the lowest levels since March 20th. From this point on, following yesterday’s mixed data out of the US, eyes are looking to jobs data.
Coming up this week, we have the nonfarm payrolls as the main event. “February’s very soft jobs report contributed to markets pricing in Fed rate cuts later this year, but we expect a much better set of figures for March which should help ease market fears about a slowdown,” analysts at ING Bank explained.
However, a major question for investors is whether wage growth will accelerate further given the historically low unemployment rate and robust employment growth. Analysts at Standard Charted explained that, “notably, the wage growth trend has diverged from that of core inflation over the last two years (see Post-FOMC decline in breakevens – Cause for worry? and China PPI outlook – Moderate deflation in 2019).”
“We expect wage growth to continue to accelerate, but not alarmingly so. This is due, in part, to wage pressures we observe among prime-age workers, who tend to be more mobile and thus command higher wage increases, and in part to ongoing momentum in headline employment, in contrast with limited upside for labour participation.”
USD/JPY levels
Analysts at Commerzbank explained that USD/JPY is inching higher and continues to remain underpinned by cloud support at 110.30 and its 3 month uptrend at 110.29, it is bid above here:
“The recent sell off looks to be corrective and it is probable that we have based at 109.70. However rallies face some dense overhead resistance offered by the 200 day ma and downtrend at 111.47/57 and the 112.13 March high. Here we also find the 112.43 55 quarter moving average and mid December high at 113.71. The 109.70 low guards the 38.2% retracement at 109.06 and there is scope for the 50% retracement at 108.11. The base of the cloud lies at 108.90.”
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