USD/JPY bulls have an appetite for higher still on 113 handle
- USD/JPY testing key resistance.
- USD/JPY bulls making efforts before nonfarm payrolls.
USD/JPY rallied hard to test the 113 handle in NY with a close just above where bulls in Tokyo are supporting the idea of higher levels yet. Currently, USD/JPY is trading at 113.24, up 0.14% on the day, having posted a daily high at 113.26 and low at 113.06.
USD/JPY is testing a key level here at 113.25 being the 26th Sep high and a slight pick up in US yields could be the tipping point for the yen, especially if the nonfarm payrolls holds up to be a bullish outcome, supporting the optimism around the economy of late in the USA.
Nonfarm payrolls outlook?
“We expect nonfarm payroll employment to increase 180k in November (Consensus: 195k), with 175k from the private sector (Consensus: 198k) and 5k from government. Reflecting the recent strength in industrial growth, we expect manufacturing employment to increase 20k (Consensus: 15k). For wages, we forecast a 0.3% m-o-m increase in average hourly earnings (Consensus: 0.3%), partially driven by a rebound from a soft, weather-related print in October. Consistent with another month of employment growth above the pace needed to absorb new labor market entrants, we expect the unemployment rate to decline 0.1pp to 4.0% (Consensus: 4.1%),” explained analysts at Nomura.
A glance at stocks, considering the Yen’s downside started off with the Nikkei that soared over 320 points yesterday, the Dow Jones Industrial Average added 70.55 points, or 0.29%, to 24,211.46, the S&P 500 rose 7.77 points, or 0.3%, to 2,636.98 and the Nasdaq Composite gained 37.32 points, or 0.55%, to 6,812.84.
Valeria Bednarik, chief analyst at FXStreet explained that the pair holds near its daily highs with a modest upward potential according to technical readings in the 4 hours chart, as the price continued recovering above its 100 SMA, but holds below the critical 200 SMA now offering a dynamic resistance around 112.90.
“Technical indicators in the mentioned chart have entered positive territory, but have a limited directional strength. Little should be expected for the upcoming hours, as the USD/JPY pair tends to hold within a tight range ahead of US employment data,” Valeria added.