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  • Yen rises further against US Dollar late on Friday, consolidates weekly losses.  
  • A decline of the US Dollar across the board weigh on USD/JPY.  

The USD/JPY pair dropped during all the American session on the back of a weaker US Dollar. Near the end of the week is trading slightly above 111.00, down 40 pips for the day.  

The greenback started to decline after the NFP report and continued to slider after data from the non-manufacturing sector. The pair dropped even as equity prices in Wall Street rose. The main driver was the retreat of the Dollar. Measured by the DXY, dropped 0.35% while the DOW JONES was up 0.75%.  

The pair is about to post the third weekly decline in a row as it continues to retreat after being unable to hold on top of 112.00, falling below the 20-week exponential moving average (111.15/20) that usually anticipated mores weakness ahead.  

What to look for next week

In the US, the economic calendar shows as the most relevant event inflation data.  “The CPI measure, which takes a basket-of-goods approach as opposed to actual spending, has been running a little hotter. On Friday of next week, we get the latest read on CPI inflation and expect
to see both headline and core come in at 2.1% year-over-year
“, wrote Wells Fargo analysts.  

Labor market data from Japan is due also next Friday. According to Danske Bank analysts, labour market cash earnings for March will be interesting as February disappointed, being significantly down 0.7% y/y. “Domestic demand has weakened somewhat recently and another month with annual real earnings decline above 1% certainly will not help on this. The labour market is still extremely tight and we expect earnings to bounce back.”

Another key event that could largely impact on USD/JPY is the US-China trade deal. Next week talks will continue in Washington and there are high probabilities about an announcement of the summit between Xi Jinping and Donald Trump, when the deal should be signed.