USD/JPY: a slow burner, downside risks to 200 DMA on the cards?
- USD/JPY to head back to the 200-day ma at 111.69?
- USD/JPY bulls not so convinced post NFP disappointment.
USD/JPY is currently trading at 113.10 having made a high of 113.18 and a low of 113.01 after closing last week at 113.15 with a session high of 113.30 and a post NFP low of 113.03.
Nonfarm payrolls came in at 148k (mkt: 190k) with average earnings up 2.5% y/y. The unemployment rate was stable at 4.1%. USD/JPY rose from 112.80 to 113.31 on Friday while US 10yr treasury yields initially fell from 2.46% to 2.43% in response to the jobs data but then rose to 2.48% which is near to the upper end of its three-month range.
US data recap
While the December headline NFP data was softer than expected, at 148k, the average earnings were as expected at 2.5% y/y and the unemployment rate steady at 4.1%. "While slightly disappointing, momentum in labour market growth is strong (3m average is 203k)," explained analysts at ANZ. "Separately, the December non-manufacturing ISM was weaker than expected. It fell to 55.9 against 57.4. The overall reading is still consistent with moderate to solid growth and the index is mean reverting from the Sept/Oct unsustainable surge to 60.1," the same analysts added.
Looking ahead, a key data release from the US comes in the core CPI for December that analysts at Nomura said should have increased by 0.2% m-o-m, as a slight acceleration from November’s 0.1%, but maintaining the y-o-y rate at 1.7%.
Fed's Williams: "three rate hikes makes sense to me"
USD/JPY levels
"With the three-month resistance line at 113.27 we expect it to cap the cross. We look for losses to the 200-day ma at 111.69 followed by the 110.85 end of November low on a fall below the 112.06/111.99 December 6 and 15 as well as current January lows. Overhead the market faces the 114.01 2015-2018 downtrend and the 114.38/82 major resistance," explained analysts at Commerzbank who added that above 114.38/82 would target the 118.60 January 2017 high."