Non-Farm Payrolls on Friday in focus – USDJPY to break below 107 again?

By Admiral Markets

Source: Economic Events October 4, 2019 – Admiral Markets’ Forex Calendar

As we enter the weekly close with the Non-Farm Payrolls being released shortly, we want to have a look at the USD/JPY.

After the weakest ISM Manufacturing reading since June 2009 last Tuesday (seeing the biggest September contraction since the end of the 2007-2009 recession), the ISM Employment component coming in at 46.3 against 47.4 for August 2019, and Wednesday’s ADP employment disappointing market participants with private business having hired 135k workers in September against 140k expected, today’s Non-Farm Payrolls have a higher likelihood of coming in weaker than the 145k expectation.

If today’s NFPs significantly disappoint by coming in below 100k, another attempt to break back below 106.80/107.00 into the weekly close is a serious possibility.

This is especially true if any further signs of risk aversion start to materialise (impeachment inquiry into US president Trump and/or escalation of the trade dispute between the US and China respectively between the US and Europe). Here, a subsequent wave of selling could already level the path lower to the region around 105.80 into the next week where a drop below 105.80 could trigger further selling, quickly activating the region around 105.00.

Generally and technically, we consider the USD/JPY bearish on a daily time-frame below 108.50/109.00, a region which shouldn’t be attacked today and in the days to come, even if today’s NFPs come in better than expected:

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between August 17, 2018, to October 4, 2019). Accessed: October 4, 2019, at 10:00 PM GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the USD/JPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, meaning that after five years, it was up by 4.1%.

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