USD/JPY steady at 200-DMA ahead of critical US NFP data

• USD/JPY elevated on positive trade tones and clarification from Beijing that trade talks are on track. 
• USD/JPY will now depend on the outcome of the highly anticipated US Nonfarm Payrolls data. 

Steady below the 200-day moving average, USD/JPY fell from 108.97 to 108.66 overnight as positive trade deal headlines flowed through the news wires and helped US stocks eke out further gains. Risk appetite was solid into the close on Wall Street overnight while trade talks dominated the market's theme. Investors had been taking on a series of positive news over this week from the US side, although, without confirmation from Beijing, markets were apprehensive to rely on such optimism.

Trade-deal news supports a risk-on tone

However, a Wall Street Journal article stated that while China and the US remain at odds over the value of farm goods Beijing will buy, an official statement from Beijing had confirmed that China’s trade negotiations with the US remain on track.

China’s Commerce Ministry said Thursday that the negotiating teams from both sides have maintained close communication, though it didn’t provide details on progress. The recent strain had spooked investors and stoked concerns over the global economic outlook,

the article leads. 

Prior to the news, there had been additional upbeat tones from Washington US President Donald Trump who said that the US is having meetings and discussions with China, describing the meetings as ‘going well’ and said that "something could happen regarding 15th Dec tariffs, but we are ‘not discussing that yet’.

Consequently, the S&P index rose 4.94 points or 0.16% at 3117.69, the NASDAQ index rose 4.031 points or 0.05% at 8570.70 and the Dow industrial average rose 29.36 points or 0.11% at 27679.14, below the 27745.2 and up from a low of 27562.80.

As for US yields, the 2-year treasury yields rose slightly from 1.56% to 1.60%, 10-year yields rose from 1.76 to 1.82%. "Markets are pricing a near-zero chance of easing at the Fed’s 11 Dec meeting but a terminal rate of 1.25% (vs Fed’s mid-rate at 1.63% currently)," analysts at Westpac explained.

Meanwhile, looking ahead, the key event will come from the US session in the form of Nonfarm Payrolls. The event is always a climax to the first week of each month, however, today's will garner particular focus considering the latest manufacturing disappointments. "Nov Nonfarm Payrolls are expected rise 185k and see the unemployment rate hold at 3.6%. Average hourly earnings are anticipated to hold at 3.0%year, still down from the 3.2%year pace seen in August," analysts at Westpac explained. 

USD/JPY levels

Meanwhile, from a technical perspective, Valeria Bednarik, the chief analyst at FXStreet explained that the, "USD/JPY pair has retreated from a congestion of moving averages, which favor a downward extension, as the 20 SMA is crossing below directionless larger ones. Technical indicators have spent the day seesawing in negative territory, the Momentum now marginally higher, although the RSI flat at around 41. The pair has an immediate resistance at 109.00, but it would need to rally beyond 109.30 to recover a bullish stance."