- USD/JPY is aiming to shift its auction profile above 145.00 amid weaker market sentiment.
- The tight US labor market is responsible for lower projections of US NFP.
- Geopolitical tensions between Japan and North Korea have impacted the yen bulls.
The USD/JPY pair is oscillating above the critical hurdle of 145.00 and is expected to sustain above the same by shifting its auction profile higher. The asset is expected to remain in the grip of bulls as the market sentiment is advocating a risk-aversion theme amid geopolitical tensions. Also, the upcoming event of the US Nonfarm Payrolls (NFP) has kept the risk-perceived currencies on the tenterhooks.
On Thursday, the major managed to cross the hurdle around 144.80, which pushed the asset above the 145.00 figure. The pair witnessed strong demand due to the sheer strength of the US dollar index (DXY). The mighty DXY recaptured the 112.00 hurdles and established itself above the same on soaring yields. The 10-year US Treasury yields printed a fresh weekly high at 3.85%.
Considering the price action, the DXY is expected to cross the immediate hurdle of 112.31 confidently. As per the CME Fedwatch tool, the probability of announcing a 75 basis point (bps) rate hike in the first week of November by the Federal Reserve (Fed) has reached 66%.
Going forward, the US Nonfarm Payrolls (NFP) data will be of utmost importance. According to the estimates, the payroll data will display addition of 250k against the former addition of 315k. The US labor market is extremely tight, therefore room for more addition is extremely low. Therefore, the DXY will continue its upside momentum.
On the Tokyo front, ongoing tensions between Japan and North Korea after frequent missile launches by the North Korean military have discarded international peace. Japanese Deputy Chief Cabinet Secretary Seiji Kihara has condemned the missile launches activity by North Korea, as reported by Reuters. He further added that "North Korea may increase provocative operations, including nuclear tests."
Apart from that, lower-than-projected Overall Household Spending data has impacted the yen bulls. The economic data has landed at 5.1%, lower than the projections of 6.7% but remained higher than the previous release of 3.4%. In spite of continuous deployment of funds into the economy by the Bank of Japan (BOJ), downbeat Overall Household Spending data is a reason to worry.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.