USDJPY - Market outlook
The US currency is adding in value, recovering from a fairly active decline at the end of last week, when the USD/JPY pair retreated from local highs from July 7. At the moment, the quotes are held in the support area of 142.15–141.15, preparing to continue growing.
On Friday, the USD was under pressure after the publication of the July labor market report. Thus, according to the data presented, the growth rate of average wages remained at the same values of 0.4% on a monthly basis and 4.4% on an annual basis, which turned out to be higher than market expectations of 0.3% and 4.2%, respectively, while the unemployment rate fell from 3.6% to 3.5%, once again updating the record minimums. At the same time, the American economy created only 187.0K new jobs outside the agricultural sector, which also turned out to be lower than the preliminary estimates of analysts at 200.0K. Mixed statistics acted as a catalyst for the decline in the quotes of the USD/JPY pair from the level of 142.53 at the opening of Friday trading to the level of 141.68 at the closing. Nevertheless, the dollar is supported by a high interest rate in the region of 5.50%, and investors are confident that US Fed officials will gradually move to the end of the "hawkish" rate, keeping the indicator at the current level, while its decline may occur no earlier than the beginning of next year.
In turn, macroeconomic data from Japan contribute to the depreciation of the yen: the index of coincident indicators at the end of June reflected an increase from 114.3 points to 115.2 points, while the index of leading indicators for the same period decreased from 109.2 points to 108.9 points, and July data recorded a drop in business activity in the service sector from 54.0 points to 53.8 points, which turned out to be slightly worse than experts' expectations at the level of 53.9 points. Thus, if the Bank of Japan adheres to its ultra-soft monetary policy, and economic indicators do not begin to recover more actively, then the upward trend in the USD/JPY pair will continue with a target at the level of 145.50.
On Friday, the USD was under pressure after the publication of the July labor market report. Thus, according to the data presented, the growth rate of average wages remained at the same values of 0.4% on a monthly basis and 4.4% on an annual basis, which turned out to be higher than market expectations of 0.3% and 4.2%, respectively, while the unemployment rate fell from 3.6% to 3.5%, once again updating the record minimums. At the same time, the American economy created only 187.0K new jobs outside the agricultural sector, which also turned out to be lower than the preliminary estimates of analysts at 200.0K. Mixed statistics acted as a catalyst for the decline in the quotes of the USD/JPY pair from the level of 142.53 at the opening of Friday trading to the level of 141.68 at the closing. Nevertheless, the dollar is supported by a high interest rate in the region of 5.50%, and investors are confident that US Fed officials will gradually move to the end of the "hawkish" rate, keeping the indicator at the current level, while its decline may occur no earlier than the beginning of next year.
In turn, macroeconomic data from Japan contribute to the depreciation of the yen: the index of coincident indicators at the end of June reflected an increase from 114.3 points to 115.2 points, while the index of leading indicators for the same period decreased from 109.2 points to 108.9 points, and July data recorded a drop in business activity in the service sector from 54.0 points to 53.8 points, which turned out to be slightly worse than experts' expectations at the level of 53.9 points. Thus, if the Bank of Japan adheres to its ultra-soft monetary policy, and economic indicators do not begin to recover more actively, then the upward trend in the USD/JPY pair will continue with a target at the level of 145.50.
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