Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
ATFX

FCA License No: 760555

ATFX-search-icon
Client Portal
Start trading
rch

USDJPY down to $138.96 after release of stable jobs report

USDJPY, which has been in a bullish trend since Monday, faced some resistance at $138.96 during the Asian session today. The bears have pushed down the price of this pair from this level, given the stable reading from the Japanese unemployment rate report released yesterday.

The fact that the Japanese unemployment rate has remained unchanged for a third consecutive time in 2022 has given investors more confidence to invest in the Japanese economy. Hence, we find Japanese stocks also rising again during the Asian session today.

According to the unemployment rate data released yesterday by the Statistics Bureau of Japan, the Japanese unemployment rate rose to 2.6%, which accords with both the forecast and previous records of this data. Japan’s number of unemployed people fell to 1.76 million YoY in July. The number of employed people remained unchanged at 67.34 million. The active labour force was reduced by 0.1% to 69.12 million.

Similarly, the job application ratio improved significantly, rising to 1.29 against the forecast of 1.27.

The Japanese labour market has proved so vital notwithstanding the limitations of the global inflation challenges. Its inflation rate has been low compared to other major economies, including the US and the UK.

Consequently, the Japanese yen strengthened gradually against all its base crosses in the market, such as EURJPY, GBPJPY, and USDJPY. All the pairs matched with the Japanese yen as its counter currency had been pushed into a downward trend while the Japanese yen recovered.

This is understandable as the unemployment rate data dramatically influences the country's currency. Thus, a high unemployment rate discourages investors from investing in the country's economy, while a reduction in unemployment attracts more investments.

Consequently, the bears have been favoured in pushing down the price of USDJPY during the Asian session today.

The weakening dollar index has further paved the way for the bears to massacre USDJPY today on the market. The dollar index (USDX) eased to 108.70 on Tuesday from its high set last week at 109.46. This has offered other pairs crossed with the US dollar an opportunity to breathe again, including USDJPY.

Investors are eagerly awaiting the reports from the US CB Consumer Confidence and its JOLTS Jobs index to determine the next direction for this pair.

The Conference Board (CB) Consumer Confidence today will determine if the US dollar regains its strength and stops the bears from dominating USDJPY or whether to continue the downward trend. The CB Consumer Confidence data is meant to portray consumers’ confidence in the past month, as evidenced by their spending. Higher readings from this data will strengthen the US dollar and likely challenge the bears to take over USDJPY entirely today. A lower reading will support the bearish outlook for USDJPY.

The next important factor influencing the performance of USDJPY in the market today is the results of the US JOLTS job openings. This data measures the number of new jobs created that are not yet occupied by the unemployed, excluding the farm industry. A higher reading from this data will strengthen the US dollar, supporting more upside movement for USDJPY, while a lower reading will probably favour the bears.

Both the bulls and the bears will need to struggle for who takes control of USDJPY today as both have fundamentally sound factors and expectations to strengthen the currency, respectively. This means we can expect a series of rebounds for USDJPY today in the market.

How will the stable unemployment rate data affect the Japanese Yen (JPY)?

The fact that the Japanese labour market has maintained fair stability for three consecutive months now builds investors' confidence in the Japanese economy’s health. It attracts more demand for the Japanese yen. This means we can expect the Japanese Yen to strengthen across its various crosses in the market.

The only setback for the Japanese yen is that its monetary policymakers (BoJ) have kept its interest rate unchanged at a negative rate of -0.1% for a considerable period. This has always given the US dollar a substantial advantage over the Japanese yen, as the Fed has raised the interest rate for the US dollar to 2.25%, making it very attractive to investors compared to the Japanese yen. Hence, more interest rate hikes for the US dollar will always discount the strength of the Japanese yen in all its crosses with the US dollar, especially USDJPY.

USD/JPY Forecast

USDJPY is currently sitting on weak support at $138.49 after facing rejection at the upper resistance at $138.97. A break below this support could lead to more downsides, with the next target of $138.24. A break below this strong support could trigger a massive sell-off with the next support at $137.50.

Alternatively, should the current support be maintained, we can expect a retest of the above resistance level.

Last Updated: 30/08/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

Recent news

Recent news
Dow Jones Targets Resistance Ahead of FOMC Minutes

The Dow Jones Industrial (US30) index is heading for a key resistance level ahead of FOMC ...

EURUSD Recent news
EURUSD Forecast For This Week’s Economic Data

The EURUSD exchange rate faces two days of economic data, and the pair could see volatilit...

Recent news
Oil Looks for Support Following OPEC+ Production

Oil prices were mixed early in the week over reports that OPEC+ was looking at a 500k dail...

Recent news
NZDUSD Continuation Pattern Trending This Week

NZDUSD has found strong support at the 0.5590 level, which should be low in place. Traders...

Recent news
GBPUSD Slips After UK Mini-Budget Announcement

GBPUSD was lower after the latest budget from the UK government. An increase in the energy...