The Japanese yen continues to post strong gains this week. In Thursday’s North American session, USD/JPY is trading at 107.65, down 1.14% on the day. On the release front, U.S. employment numbers were mixed. ADP (NASDAQ:ADP) nonfarm payrolls in November jumped to 271 thousand, crushing the estimate of 179 thousand. This was a sharp increase from the November reading of 179 thousand. Unemployment claims were higher than expected, climbing from 216 thousand to 231 thousand, above the estimate of 220 thousand. As well, ISM Manufacturing PMI dropped sharply to 54.1, down from 59.3 points in the previous release. This missed the estimate of 57.7 points. Later in the day, Japanese Final Manufacturing PMI is forecast to tick higher to 52.4 points. On Friday, the focus will again be on U.S. employment data, with the release of nonfarm payrolls and wage growth.
With Japanese banks closed for most of this week and the markets on holiday on New Years’ Day, traders were not expecting significant movement from USD/JPY. However, the yen has climbed 2.36% this week, after Apple (NASDAQ:AAPL) stunned the markets when it cut its quarterly sales forecast. The revenue warning, which was released after the close of North American markets on Wednesday, caught the markets by surprise. Apple blamed the downturn on weaker iPhone sales in China, which has been hit by an economic slowdown due to the ongoing tariff battle with the United States. Investors reacted by flocking to the safety of the yen, which gained as much as 3.4% on Thursday. The dollar has traditionally been a safe-haven asset, but this role is being re-evaluated, with some analysts calling the yen the “safer safe-haven”. If investor jitters continue, the yen’s impressive rally could continue.
World stock markets continue to show strong volatility. With investors reading in their morning newspapers that equity markets suffered their worst year since 2008, risk apprehension remains high as we begin the New Year. However, one positive development in December was the announcement that U.S. and Chinese delegations are set to meet next week and tackle the trade issues that have sparked a serious rift between the world’s two largest economies. The talks are critical, as the U.S. has said that it will impose heavy tariffs on Chinese products on March 1, but agreed to suspend the move while talks are ongoing. Earlier in the week, President Trump said that ‘big progress’ had been made with China, but with the sides yet to meet face-to-face, the markets are not putting much stock in Trump’s remarks.
USD/JPY Fundamentals
Thursday (January 3)
- 7:30 US Challenger Job Cuts. Actual 35.3%
- 8:15 US ADP NonFarm Employment Change. Estimate 179K. Actual 271K
- 8:30 US Unemployment Claims. Estimate 220K. Actual 231K
- 10:00 US ISM Manufacturing PMI. Estimate 57.7. Actual 54.1
- 10:00 US ISM Manufacturing Prices. Estimate 57.9. Actual 54.9
- All Day – US Total Vehicle Sales. Estimate 17.2M
- 19:30 Japanese Final Manufacturing PMI. Estimate 52.4
Friday (January 4)
- 8:30 US Average Hourly Earnings. Estimate 0.3%
- 8:30 US Nonfarm Employment Change. Estimate 178K
- 8:30 US Unemployment Rate. Estimate 3.7%
- 10:15 US Fed Chair Powell Speaks
*All release times are EST
*Key events are in bold
USD/JPY for Thursday, January 3, 2019
USD/JPY December 20 at 11:40 EST
Open: 108.88 High: 108.92 Low: 104.82 Close: 107.65
USD/JPY Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 104.64 | 105.66 | 106.88 | 108.11 | 109.37 | 110.28 |
It was a roller-coaster ride for USD/JPY in the Asian session, as the pair dropped sharply, breaking below several support levels. However, the pair then recovered much of these losses. USD/JPY edged higher in European trade and has been flat in North American trade
- 106.88 is providing support
- 108.11 is the next resistance line
- Current range: 106.88 to 108.11
Further levels in both directions:
- Below: 106.88, 105.66 and 104.64
- Above: 108.11, 109.37 and 110.28