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  • USD/JPY steady in anticipation of trade news and nonfarm payrolls at the end of the week.
  • USD/JPY is currently trading at 111.75 within a tight range of between 111.61/92.

While a lack of catalysts sees USD/JPY confined to a tight range, the pair is taking its cues from global equity prices which are slumping in the face of limited momentum of progress. The trade figures haven’t brought much cheer to markets today and the slightly-weaker-than-expected ADP jobs report has dampened the mood also.  

The US Trade Deficit soared in December. -$59.8 billion, as the highest since Oct 08 (Exports -1.9% / Imports +2.1). The trade Deficit FY18 +12.5% $621 billion (Exports +6.3% / Imports +7.5%) – Resulting in an all-time trade deficit with China of $419 billion.

Meanwhile, the February ADP came in a touch below expectations at 183k (mkt: 190k), but with the January print revised up 87k to 300k the overall read was solid – quite solid given the average monthly gain this cycle (since July 2009) has been 174k.

“All up, these data continue to show very strong momentum in US jobs growth,” analysts at ANZ bank argued, adding, ” However, it’s possible they overstate the strength in the NFP out in a couple of days, particularly given any volatility caused by the US government shutdown is yet to be worked through. Meanwhile, the December trade deficit came in at USD59.8bn (last: 50.3bn, mkt: 57.9bn) with exports down 1.9%. For 2018, the trade deficit widened 12.5% to USD621bn.”

USD/JPY levels

On the techncial front, analysts at Commerzbank note that USD/JPY last week eroded the 200-day ma:

“This was key resistance and given its demise we will allow for further gains. Immediate resistance is 112.23, the 6 the December low, the 112.43 55 quarter moving average and recent high at 113.71. We have a 5-month resistance line also at 113.19. It is underpinned by the 20-day ma at 110.77 and this guards the base of the channel at 109.67. While above here we will assume an upside bias.”