USD/JPY – Dollar Flirts With 104 As US Employment Data Shines

USD/JPY continues to trade at high levels as the pair trades in the mid-103 range in Wednesday's European session. The pair came close to the 104 line, its highest level since late January. In the US, ADP Nonfarm Payrolls posted a sharp gain, matching expectations. There are no Japanese releases on Wednesday.

The first US employment release of the week met high expectations, as ADP Nonfarm Payrolls jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. The markets will get a good look at the US employment picture in the next few days, with Unemployment Claims, the Unemployment Rate and NFP still to come.

The important Japanese Tankan indexes painted a mixed picture last month, and the yen did not react to these releases. The Manufacturing Index rose slightly to 17 points, falling short of the estimate of 19 points. However, the Non-Manufacturing Index looked sharper, jumping to 24 points from 20 points a month earlier, matching the forecast. On Monday, Preliminary Industrial Production starting off the week with a whimper, declining 2.3% in February, an eight-month low.

Earlier in the week, Fed chair Janet Yellen said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.

USD/JPY 103.65 H: 103.93 L: 103.61