30 Mar 2016
US ADP preview: What to expect of USD/JPY?
USD/JPY clocked a one-week low of 112.02 in Europe on the back of broad based USD selling before trimming losses to trade around 112.30 levels ahead of the US ADP private sector employment report.
Weak data could trigger fresh wave of USD selling
Off late market expectations regarding Fed rate hike are dependent on US wage growth, inflation and Fed speak. Labor market has been performing well, despite which Fed has killed rate hike bets.
Consequently, a strong jobs report is not surprising and does not push up rate hike bets. But a weaker figure would only add credence to Fed’s cautious stance and reinforce expectations of a further delay in the next rate hike. Thus, a fresh sell-off in USD could be seen in case the ADP figure misses the consensus estimate by a wide margin.
On the other hand, it would take a surprisingly strong ADP figure to push up rate hike bets and lead to unwinding of dollar shorts. Market expects ADP report to show the private sector in the US added 194K jobs in March as compared to 214K jobs additions seen in January.
USD/JPY Technical Levels
Acceptance above immediate hurdle at 112.56 (hourly 200-MA) would open doors for 113.09 (confluence of hourly 50-MA and hourly 100-MA). A violation there could trigger unwinding of shorts and result in a re-test of 113.80 (previous day’s high).
Conversely, a break below daily low of 112.02 would expose 111.77 (Feb 23 low), under which the spot could drift lower to 110.67 (Mar 17 low).
Weak data could trigger fresh wave of USD selling
Off late market expectations regarding Fed rate hike are dependent on US wage growth, inflation and Fed speak. Labor market has been performing well, despite which Fed has killed rate hike bets.
Consequently, a strong jobs report is not surprising and does not push up rate hike bets. But a weaker figure would only add credence to Fed’s cautious stance and reinforce expectations of a further delay in the next rate hike. Thus, a fresh sell-off in USD could be seen in case the ADP figure misses the consensus estimate by a wide margin.
On the other hand, it would take a surprisingly strong ADP figure to push up rate hike bets and lead to unwinding of dollar shorts. Market expects ADP report to show the private sector in the US added 194K jobs in March as compared to 214K jobs additions seen in January.
USD/JPY Technical Levels
Acceptance above immediate hurdle at 112.56 (hourly 200-MA) would open doors for 113.09 (confluence of hourly 50-MA and hourly 100-MA). A violation there could trigger unwinding of shorts and result in a re-test of 113.80 (previous day’s high).
Conversely, a break below daily low of 112.02 would expose 111.77 (Feb 23 low), under which the spot could drift lower to 110.67 (Mar 17 low).