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JPY Rallying
USDJPY is pushing lower once again today as traders brace for the August NFP report due this afternoon. A series of weak labour market readings this week have raised fears of fresh weakness in the NFP data. Last month, global markets were seen tanking after the NFP came in well below forecasts, stoking US recessionary fears. The uptick in Fed easing expectations on the back of the data was sharply juxtaposed with the hawkish action and signals from the BOJ, amplifying the USDJPY selling underway. Now, the prospect of a fresh weakness in today’s data could see the downtrend reignited, creating plenty of volatility risk ahead of the weekend.
Fed Easing Expectations
Fed chairman Powell has recently confirmed that the bank is set to ease rates when it meets this month, warning that the Fed has plenty of room to adjust rates as needed. Indeed, Fed’s Goolsbee today said that US economic data points to the need for several rate cuts, beginning this month, highlighting dovish risks within the bank’s outlook. As such, if today’s data comes in below forecasts, this will certainly raise the prospect of more aggressive action from the bank this month (.5% cut v .25% cut) or at the very least, a more stridently dovish set of guidance. With the BOJ at the same time reaffirming its commitment to pressing ahead with further tightening, USDJPY looks vulnerable to fresh downside near-term.
Technical Views
USDJPY
The recovery in USDJPY has stalled for now into the 146.81 level with price since turning lower again. The market is now trading back below the bull trend line and is fast approaching a test of 140.50. Below there, 137.36 is the next support level to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.