Yen Moves Higher As U.S. Jobless Claims Leaps

USD/JPY has posted losses on Thursday, erasing the gains which marked the Wednesday session. In North American trade, the pair is trading at 108.70, down 0.44% on the day. In the US, unemployment claims jumped to 298 thousand, well above the estimate of 245 thousand. Later in the day, Japan releases Final GDP for the second quarter, with an estimate of 0.7%. As well, the current account surplus is expected to climb to 1.65 trillion yen.

US employment numbers continue to disappoint. Unemployment claims jumped to 298 thousand last week, the highest level since April 2015. This follows weak readings in July for nonfarm payrolls and wage growth. However, the jump in jobless claims can be attributed to Hurricane Harvey, which led to thousands of displaced workers in Texas filing for unemployment benefits. Unemployment numbers could remain high in upcoming weeks, until flooded areas are able to get on their feet and rebuilding efforts pick up steam.

The Japanese currency has enjoyed a strong start in September, gaining 1.1% against the US dollar. Much of the yen’s appreciation is a direct result of the ongoing North Korean crisis, as the safe-haven yen has been in demand following missile launches by North Korea, which has raised tensions in the area. Earlier this week, the yen improved sharply following North Korea’s announcement that it had tested a hydrogen bomb which could be used in a missile strike. North Korea’s actions have alarmed South Korea, with South Korean President Moon Jae-in warning that the situation risked becoming “uncontrollable”. If the situation in the Korean peninsula continues to deteriorate, jittery investors could continue to snap up the yen.

The Federal Reserve released its Beige Book report on Wednesday, and the survey found that wage pressure remains limited, despite the fact that many businesses cannot fill job openings. The lack of wage growth has been an important factor in ongoing weak inflation levels, despite moderate economic growth and a very strong labor market. Weak inflation has hampered the Fed’s plans to raise interest rates a third time this year, and the odds of a December hike have dipped to just 31%, as the markets are increasingly doubtful that the Fed will make a move before next year.

USD/JPY Fundamentals

Thursday (September 7)

  • 8:30 US Unemployment Claims. Estimate 245K. Actual 298K
  • 8:30 US Revised Nonfarm Productivity. Estimate 1.3%. Actual 1.5%
  • 8:30 US Revised Unit Labor Costs. Estimate 0.3%. Actual 0.2%
  • 10:00 US IBD/TIPP Economic Optimism. Estimate 53.1
  • 10:30 US Natural Gas Storage. Estimate 63B
  • 11:00 US Crude Oil Inventories. Estimate 4.1M
  • 19:00 US FOMC Member William Dudley Speaks
  • 19:50 Japanese Final GDP. Estimate 0.7%
  • 19:50 Japanese Bank Lending. Estimate 3.3%
  • 19:50 Japanese Current Account. Estimate 1.65T
  • 19:50 Japanese Final GDP Price Index. Estimate -0.4%

*All release times are GMT

*Key events are in bold

USD/JPY for Thursday, September 7, 2017

USD/JPY Chart: September 6-7

USD/JPY September 7 at 10:05 EDT

Open: 109.18 High: 109.26 Low: 108.63 Close: 108.70

USD/JPY Technical

S3S2S1R1R2R3106.28107.49108.69110.10110.94112.57

In the Asian session, USD/JPY edged lower but recovered. The pair posted small gains in European trade and continues to move in the North American session

  • 108.69 remains under pressure. It could break in the North American session
  • 110.10 is the next resistance line

Current range: 108.69 to 110.10

Further levels in both directions:

  • Below: 108.69, 107.49 and 106.28
  • Above: 110.10, 110.94, 112.57 and 113.55

OANDA’s Open Positions Ratios

USD/JPY ratio remains unchanged this week. Currently, long positions have a majority (63%), indicative of trader bias towards USD/JPY breaking out and moving higher.

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