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US ADP Non-Farm Employment Change measures the change in the number of newly employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for USD/JPY.

Published on Wednesday at 13:15 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of USD/JPY.

The ADP Non-Farm Employment Change has posted three straight declines, and last month’s reading of 130 thousand was  a six-month low. The  markets are expecting  a sharp turnaround, with  the  estimate standing at 172 thousand. If  the indicator can meet or beat this rosy forecast, the dollar could gain ground.

Sentiment and Levels

The US dollar continues to beat up on the struggling yen, as the pair trades  close to the 103  line. If this week’s US employment releases  are solid, we could see the surging dollar continue to push to higher ground.  QE tapering, which  is likely in the next few months, is a dollar-positive event. Thus, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 106.66, 105.70, 104, 102.50,  101.44 and 100.85.

5 Scenarios

  1. Within expectations: 160K to 184K. In such a scenario, the USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 185K to 200K: An unexpected higher reading can send USD/JPY above one resistance line.
  3. Well above expectations: Above 200K: The chances of such a scenario are low. Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
  4. Below expectations: 144K to 159K: A smaller gain than forecast could cause USD/JPY to fall below one level of support.
  5. Well below expectations: Below 144K. In this scenario, the USD/JPY could break a second support level.

For more about the USD/JPY, see the USD to JPY forecast.

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