10 Jan 2014
USD/JPY bullish momentum continues ahead of non-farm payrolls
FXstreet.com (London) - USD/JPY continues with its bullish momentum ahead of US non-farm payroll numbers due out later today.
While the non-farm payroll numbers are a key short-term driver of the pair, the biggest directional driver remains the diverging monetary policy expectations between the US Federal Reserve and the Bank of Japan.
Non-farm payroll optimism
Market consensus is bullish on the non-farm payroll print at 13:30 GMT, with expectations for recent momentum to continue as part of a strengthening US economic outlook. While consensus expectations are at 196k, non-farm Friday exuberance has begun pointing to a higher print. With consensus expectations high, the downside risks are ramped up for any miss.
Longer-term, the bullish momentum trade that has carried the USD/JPY pair since the Fed’s 18 December meeting remains in place. While The Fed is expected to continue to taper its monthly asset purchases – currently standing at USD75bn a month – Japan remains firmly committed to monetary expansion, buying up a current JPY7 trillion of bonds a month. Japanese officials have indicated that they are prepared to increase bond purchases in a fight against deflationary pressures.
Strong print will carry momentum
USD/JPY currently stands at a near-session high of JPY105.0155, up 0.15 percent on the day from an opening of JPY104.8255. Given already optimistic expectations, a strong non-farm payroll print may not be enough to challenge the three-and-a-half year highs recorded last week at JPY105.4415, but it will help maintain bullish USD/JPY momentum.
While the non-farm payroll numbers are a key short-term driver of the pair, the biggest directional driver remains the diverging monetary policy expectations between the US Federal Reserve and the Bank of Japan.
Non-farm payroll optimism
Market consensus is bullish on the non-farm payroll print at 13:30 GMT, with expectations for recent momentum to continue as part of a strengthening US economic outlook. While consensus expectations are at 196k, non-farm Friday exuberance has begun pointing to a higher print. With consensus expectations high, the downside risks are ramped up for any miss.
Longer-term, the bullish momentum trade that has carried the USD/JPY pair since the Fed’s 18 December meeting remains in place. While The Fed is expected to continue to taper its monthly asset purchases – currently standing at USD75bn a month – Japan remains firmly committed to monetary expansion, buying up a current JPY7 trillion of bonds a month. Japanese officials have indicated that they are prepared to increase bond purchases in a fight against deflationary pressures.
Strong print will carry momentum
USD/JPY currently stands at a near-session high of JPY105.0155, up 0.15 percent on the day from an opening of JPY104.8255. Given already optimistic expectations, a strong non-farm payroll print may not be enough to challenge the three-and-a-half year highs recorded last week at JPY105.4415, but it will help maintain bullish USD/JPY momentum.