The Japanese yen has posted gains on Thursday, as USD/JPY trades at 117.50 in the European session. In economic news, the US will release Unemployment Claims, with the key indicator expected to remain steady at 279 thousand. There are no Japanese events on the schedule.
The yen continues to enjoy an outstanding week, having surged some 370 points against the US dollar. This follows sharp losses by the yen late last week, following the surprise move by the BOJ to adopt negative interest rates for the first time in its history.
The yen has taken advantage of weak US numbers, as ADP Nonfarm Payrolls and the ISM Non-Manufacturing PMI both softened in January. The ADP report, which precedes the official NFP report on Friday, dropped to 205 thousand in January, compared to 257 thousand a month earlier. The figure did beat the estimate of 193 thousand, but recent employment data has been lukewarm, raising eyebrows in the markets about the health of the US economy.
There was no relief from ISM Non-Manufacturing PMI, a key gauge of the services sector. The index dipped to 53.2 points in January, its worst showing since March 2014. We’ll get another look at US job numbers later on Thursday, with the release of Unemployment Claims. If these upcoming employment reports are soft, the impressive yen rally could continue.
A robust labor market in the second half of 2016 was a key factor in the Federal Reserve decision to raise interest rates in December, but employment numbers have been lukewarm in early 2016. Employment numbers will be closely monitored by the Fed, which will have to decide if the economy is ready for another rate increase in March.
In the heady days following the Fed’s historic rate hike, there was talk of up to 4 rate hikes in 2016, but this appears unlikely, given current economic conditions and the collapse of oil prices, which has kept low inflation in check.
USD/JPY Fundamentals
Thursday (Feb. 4)
- 2:15 US FOMC Member Eric Rosengren Speaks
- 7:30 US Challenger Job Cuts
- 8:30 US Unemployment Claims. Estimate 279K
- 8:30 US Preliminary Nonfarm Productivity. Estimate -1.5%
- 8:30 US Preliminary Unit Labor Costs. Estimate 3.9%
- 10:00 US Factory Orders. Estimate -2.5%
- 10:30 US Natural Gas Storage. Estimate -170B
*Key releases are highlighted in bold
*All release times are EST
USD/JPY for Thursday, February 4, 2016
USD/JPY February 4 at 6:25 EST
Open: 118.17 Low: 117.33 High: 118.21 Close: 117.55
USD/JPY Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 114.65 | 115.90 | 116.88 | 118.53 | 119.58 | 120.40 |
- USD/JPY was steady in the Asian session and has posted slight losses in European trade.
- 119.58 has switched to a resistance role following gains by the yen. This is a weak line which could see more action during the day.
- 118.53 is providing support
- Current range: 118.53 to 119.58
Further levels in both directions:
- Below: 116.88, 115.90 and 114.65
- Above: 118.53, 1119.58, 120.40 and 121.50
OANDA’s Open Positions Ratio
USD/JPY ratio is showing slight movement towards long positions, consistent with USD/JPY continuing to drop, resulting in more short positions being covered. Long positions have a solid majority (70%), which is indicative of strong trader bias towards the pair reversing directions and moving higher.