The USD/JPY has been consolidating roughly between 102.75 and 118.40 since late march. It was essentially trading in the middle of this range ahead of the US NFP data. In the near-term, the market seemed optimistic ahead of the key event risk as we can see a rally above 120 prior to the release of the jobs data.
The 1H chart shows a market diving during the release of the jobs report.
US NFP (Apr.): 223K
Previous: 85K (revised from 126K)
Unemployment Rate (Apr.): 5.4%
Average Hourly Earnings (Apr.): 0.1%
Previous: 0.2% (revised from 0.3%)
The headline print of 223K was not that much off the 228K average forecast. It does restore some confidence in the direction of the labor market, especially after a disappointing reading last month, which was actually revised further down. The thing is, this is not going to be enough to urge the FOMC to raise rates – definitely not in June, and not very convincing for September neither. The reason I have my doubts about the September projection is that wage growth is still very slow as we can see again in April’s “average hourly earnings” data.
The USD/JPY fell after the jobs data. I wouldn’t read too much into this. It is essentially staying in its consolidation range for about a month and a half.
The 4H chart shows a market continuing to trade in the middle of its range since late March. While today’s jobs data was a bit disappointing, it should not weigh on the USD too much. I doubt it will be able to push USD/JPY below its 118.30-50 support area.
Given the current technical range, and the fact that today’s NFP is not that bad, we should look for buyers as price approaches that 118.30-118.50 support area.
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