- The US economy added 164K new jobs in July, matching consensus estimates.
- Slightly better wage growth data helped the USD to recover its early lost ground.
- Traders seemed inclined to cover their bearish positions amid oversold conditions.
The USD/JPY pair quickly reversed the post-NFP dip and recovered around 40-pips from multi-month lows, with bulls eyeing a follow-through move beyond the 107.00 handle.
The US monthly jobs report came in to show an addition of 164K new jobs in July as compared to the previous month’s downwardly revised reading of 193K (224K) reported earlier, while the unemployment rate held steady at 3.7%. Meanwhile, a slight beat in the monthly average earnings growth, coming in at 0.3% as against 0.2% expected, triggered a modest rebound in the US Treasury bond yields and helped the US Dollar to recover the early lost ground.
The pair, however, seemed rather unimpressed amid renewed concerns about a full-blown trade war between the world’s two largest economies, especially after the US President Donald Trump on Thursday announced to impose additional 10% tariffs on the remaining $300 billion worth of Chinese goods. The move rattled global financial markets, which benefitted the Japanese Yen’s safe-haven status and might do little to ease the bearish pressure surrounding the major.
Meanwhile, in absence of any big disappointment from the latest US employment details, bearish traders now seemed inclined to cover their positions amid extremely oversold conditions and hence, runs the risk of fizzling out rather quickly, warranting some caution before positioning for any strong follow-through recovery.
Technical levels to watch
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