USD/JPY: yen keeps up the bid on safe haven flow

• Yen bid on safe haven flows.
• Yellen would not declare that stocks are in a bubble.

US equities take a hit USD/JPY is currently oscillating (109.85) tucked in below the 110 handle after a poor close on Wall Street on Friday. USD/JPY has made a high of 110.29 and a low of 109.79.

US non-farm payrolls rose 200k in Jan, beating expectations of 180k. Benchmark revisions over 2017 were also positive. The household survey corroborated the establishment data with a +409k gain though the unemployment rate remained at 4.1%. Job gains were broad-based: construction +36k, manufacturing +15k, retail +15k, and services +139k.

"However, wage growth was a more important development," explained analysts at Nomura. "Average hourly earnings increased 0.3% m-o-m, coupled with positive revisions to past months that contributed to an acceleration of the 12-month change rate to 2.9% in January, the fastest pace during the recovery...wage growth appears to show signs of picking up after a lacklustre 2017," the analysts added.

Safe haven buyers of yen as US stocks fall

In terms of equities, the S&P 500 fell 2.1% which was the biggest one-day fall since 2016. The Dow Jones Industrial average fell -666pts, -2.5%. "In an interview broadcast after the NY close, departing Fed chair Yellen pointed out that US equities and commercial real estate prices were high though she wouldn’t declare a bubble. Yellen also admitted that she was disappointed not to be offered a second term as Fed chair," noted analysts at Westpac.

USD/JPY levels 

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart shows that the pair settled a couple of pips above its 100 SMA, while technical indicators pulled back after reaching overbought readings. "The pair would need now to surpass the 110.50 level to resume its advance, and maintain a positive tone through the upcoming sessions," Valeria added and explained further that the pair is far below its 100 and 200 DMAs, while the Momentum indicator has lost its upward strength and turned back lower within negative territory as the RSI indicator holds around 47.