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The jobs report from ADP provides a snapshot  of private sector employment in the US, as well as a hint for the official Non-Farm Payrolls publication coming on Friday. 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 12:15 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.

ADP  Nonfarm Payrolls  showed a gain of  214K in February,  easily beating  the estimate of 185 thousand. The markets are expecting a softer reading in March, with the estimate standing at 194 thousand.

Sentiment and Levels

With renewed talk of a Fed rate hike as early as April, monetary divergence will make the US dollar an attractive asset. The Japanese economy is struggling, and if the Tankan indices do not meet expectations, the yen slide could continue. So, the overall sentiment is bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 115.90, 114.65, 113.71, 112.48, 110.94  and 109.81

5 Scenarios

  1. Within expectations: 190K to 199K. In such a scenario, the USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 200K to 205K: An unexpected higher reading can send USD/JPY above one resistance line.
  3. Well above expectations: Above 205K: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
  4. Below expectations:184K to 189K: A smaller increase than forecast could  push USD/JPY below one level of support.
  5. Well below expectations: Below 184K. In this scenario, the USD/JPY could break a second support level.

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