Strong ADP = strong NFP’s and the USD/JPY for a stint above 110.00?
Source: Economic Events February 7, 2020 - Admiral Markets' Forex Calendar
It's the first Friday of the month, so forex traders, particularly of the USD/JPY, will watch for the release of the Non-Farm Payrolls with excitement.
This is particularly true after the strong ADP data set last Wednesday, which is usually positively correlated with, and a good indicator of, the NFPs. Here, private businesses in the US hired 291,000 workers in January 2020, the most since May 2015, handily beating market expectations of a 156,000.
With that in mind, today's NFPs have a solid chance to also beat expectations, and add further fuel to the strong performance of the USD/JPY over the last few days, after the currency pair failed to sustainably break below 108.00.
While the overall technical mode in the USD/JPY stays neutral and choppy, a push above 110.00 brings the region around 110.70 into our focus again, and could potentially be traded on the shorter time-frames.
Still, we remain cautious as to long engagement in the USD/JPY. Because despite solid US economic data over the last few days, expectations among market participants point to the Fed cutting rates by a minimum of 25 basis points in 2020, with a likelihood of around 80% (according to the Fed Watch Tool as of last Thursday).
With that in mind, we think that any bullish moves in the US dollar may be short-lived, and should be cautiously reviewed.
Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between November 27, 2018, to February 7, 2020). Accessed: February 7, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of USD/JPY 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%, in 2019, it fell by 0.85%, meaning that after five years, it was down by 9.2%.
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.