Solid NFPs + relaxation between the US and China = USD/JPY above 107?
Source: Economic Events September 6, 2019 - Admiral Markets' Forex Calendar
As we go into the weekly close, all eyes will be on the US employment situation, the Non-Farm Payrolls.
After last Tuesday, where the ISM Manufacturing PMI in the US fell to 49.1 in August 2019 from 51.2 in July (and missed market expectations of 51.1 while pointing to the first month of contraction in the manufacturing sector since January 2016 as new orders and particularly employment declining), amid concerns about a further escalation in US-Chinese trade conflict, the outlook for today's NFPs is not very promising.
What's particularly interesting now is that on Thursday, headlines made rounds that US and Chinese envoys will meet in early October for more talks aimed at ending the tariff war that threatens global economic growth. With stabilising 10-year US yields, the USD/JPY went for an attack of the region around 106.80/107.00 and seems to go for a try to sustainably recapture it.
That said, our take is: any NFP print which comes in better than expected will likely see USD/JPY bulls push significantly back above 107.00 into the weekly close, taking on further bullish momentum and a stint up to 108.50/109.00 being an option, especially if speculation of a favourable trade deal between the US and China for both sides start to manifest over the next days and weeks.
On the other hand: any disappointing NFP print and/or new "Twitter escalation" from US president Trump such as "Sure, we aim at a favourable deal – for the US! China will pay!" could dampen the hopes and speculation that the US and China will agree on a deal, meaning that yesterday's push above 107 was a fake out.
A sharper drop below 105.80 could trigger here a wave of further selling and quickly activate the region around 105.00 again:
Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between June 7, 2018 to September 5, 2019). Accessed: September 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%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.
