Will today’s Non-Farm Payrolls follow ADP and push the USD/JPY below 108.00?

December 6, 2019

By Admiral Markets

Economic Event December

Source: Economic Events December 6, 2019 – Admiral Markets’ Forex Calendar

As we head towards the weekly close, our focus will be on the Non-Farm Payrolls, and by extension, the yield-sensitive currency pair, the USD/JPY.

After the drop back below 109.00, brought on by Monday’s announcement that US president Trump is to restore tariffs on steel and aluminium shipped from Brazil and Argentina, in addition to his administration proposing tariffs “up to 100%” on certain French goods (about $2.4 billion worth) in retaliation to France’s digital services tax, a risk-off kicked in and 10-year UST yields dropped alongside the USD/JPY.

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In addition to that, mixed US data releases over the last days, such as the ADP (usually known as a solid indication of NFP performance) coming in at only 67,000 against an expected 140,000, made it likely for a disappointing NFP reading today, and a drop below 108.00 in the USD/JPY.

If Non-Farm Payrolls print below 150,000, the way that market participants priced the Fed to not move in regards to their interest rate level next week, could result in a sharper shift and bearish catalyst for the USD/JPY.

While we still don’t see the Fed shifting policy even if NFPs disappoint today, but increasingly dovish rhetoric becomes likely, and would drive the USD/JPY lower:

USDJPY-Daily Chart

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between September 27, 2018, to December 5, 2019). Accessed: December 5, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the USD/JPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, meaning that after five years, it was up by 4.1%.

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