USD/JPY – Yen extends rally ahead of US jobs data

Kenny Fisher MarketPulse

The Japanese yen has posted strong gains on Friday. In the European session, USD/JPY is trading at 142.76 at the time of writing, down 0.47% on the day. The yen is on a tear and is up 2.3% against the greenback this week.

Japan’s household spending misses expectations

Japan’s economy is showing signs of recovery but consumers are not convinced and continue to keep a tight grip on their purse strings. Household spending eked out a gain of 0.1% y/y in July, rebounding from a 1.4% decline in June but short of the market estimate of 1.2%. Monthly, household spending fell 1.7% in July, the steepest decline in six months. This followed a 0.1% gain in June and was much lower than the market estimate of -0.2%.

US Nonfarm Payrolls could shake up markets, determine size of Fed cut

Today’s nonfarm payroll report has been hotly anticipated. Will we see an improvement from the July debacle of 114 thousand new jobs, which routed the global financial markets? The markets have largely recovered from the melt down but investors remain nervous and another poor nonfarm payroll release could send the markets sharply lower. The market estimate for August stands at 160 thousand.

This week’s US job numbers were mixed and investors are hoping to get some clarity about the labor market from today’s employment report. Unemployment claims dropped but JOLT job openings declined and missed expectations. The August ADP employment report dropped to just 99 thousand, down from a revised 111 thousand in July and way off the market estimate of 145 thousand. The ADP report has generally not been a reliable indicator for nonfarm payrolls, although the correlation has been stronger this year.

If the nonfarm payrolls release comes in as expected or higher, it could cement a 25-basis point from the Federal Reserve at the Sept. 18 meeting. Conversely, a weaker-than-expected reading would raise expectations for an oversize cut of 50 bps. The markets have currently priced in a 50-bps reduction at 43% and a 25-bps cut at 67% according the CME’s FedWatch, but I expect those odds to change before the day is over.

USD/JPY technical

USD/JPY is testing support at 142.79. Below, there is support at 142.13.
There is resistance at 143.51 and 144.17.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD looks inconclusive in the low 1.1400s

EUR/USD alternates gains with losses in the 1.1420 region in the latter part of the NA session on turnaround Tuesday. The pair’s vacillating price action comes amid the lack of clear direction in the US Dollar. Meanwhile, market participants are expected to gear up for the upcoming key releases on the US docket and developments from the ECB Forum in Sintra.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Coinbase, BlackRock, Visa and Stripe support Open Standard’s OUSD stablecoin

Open Standard on Tuesday unveiled Open USD (OUSD), a dollar-pegged stablecoin designed for global payments, backed by more than 140 companies. The founding coalition spans payment networks, banks, fintech firms, technology platforms and crypto infrastructure providers, including Shopify, Google, Ripple, Solana, Coinbase, Visa, Mastercard, Stripe, BlackRock and BNY.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.