July NFP Misses Forecast and Helps USD/JPY Form a Price Top

July NFP Misses Forecast and Helps USD/JPY Form a Price Top

US Payrolls increased by 209K in July, missing forecast of around 230K. June’s NFP print was revised up to 298K. The unemployment rate edged up to 6.2% in July from June’s 6.1% reading. Today’s jobs data is slightly disappointing relative to forecasts, but is decent in the overall scheme of things.

US NFP 8/1

Jobless Rate
US Jobless Rate 8/1

(source: forexfactory.com)

In other jobs data today:
Average Hourly Earnings m/m (July): 0.0%, Forecast: 0.2%, Previous: 0.2%
Core PCE Price Index m/m (July): 0.1%, Forecast: 0.2%, Previous: 0.2%
Personal Spending m./m (July): 0.4%, Forecast: 0.5%, Previous: 0.3%

The collective series of data above is decent, but may not be strong enough to keep USD gaining as it has been in July. One particular data point of concern could be the average hourly earnings, which reflected flat wage growth in July. We have seen the BoE speak on its concern about UK’s lack of wage growth. So, watch out for this concern to weigh on the USD after its recent rally.

The USD/JPY is reacting negatively to this data. After the FOMC statement, it held around 103 attempting to form a price top. Today’s NFP report helped the usd-yen complete this price top by dragging in below 102.70. If price can hold below 102.90 on a pullback, and stay south of 102.70 thereafter, we should be looking at a short-term consolidation for next week.

USD/JPY 1H Chart 8/1
usdjpy 8/1 1h chart

(click to enlarge)

Short-term Bearish Outlook:
In the near-term the price tops calls for a bearish swing about 30 pips below the 102.72 support. This shows a near-term breakout projection to about 102.45. You can see that this is where the 100-Hour SMA resides. Below that, the 102 handle is likely a key support, and last line of defense for the bullish scenario.

USD/JPY Daily Chart 8/1
usdjpy 8/1 daily chart

(click to enlarge)

102 is  Key:

Looking at the daily chart, you can see that this week’s price action signaled a bullish outlook after breaking above 2014-‘s descending triangle. If price is to be bullish, it should hold above the cluster of 200-, 100-, 50day SMAs. That suggests support around 102.

A break below 101.90 will likely break below the moving averages and invalidate the bullish breakout, putting focus back toward the 101.10 lows in July, and then the 100.75 lows on the year.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.