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Uncle Sam is printing the ADP report in a bit!

Think the release will affect USD/JPY’s short-term downswing?

Before moving on, ICYMI, yesterday’s watchlist checked out NZD/USD’s downtrend retracement ahead of New Zealand’s quarterly labor data release. Be sure to check out if it’s still a valid trade!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.K.’s mortgages unexpectedly jump (71,015 vs. 66,000 expected) in Dec

Canada’s 0.6% Nov growth beats 0.3% expectations but Statistics Canada says Dec growth was likely flat

U.S. Markit manufacturing PMI for Jan 55.5 vs. 55.0 preliminary estimate

U.S. ISM manufacturing PMI falls to 57.6 in Jan vs. 57.5 expected, 58.7 in Dec

U.K. shop price inflation almost doubles from 0.8% to 1.5% in Jan

China, Hong Kong, and South Korea’s markets out on bank holiday

RBA Gov. Lowe: The end of the bond-buying program did “not mean that an increase in the cash rate is imminent.”

New Zealand jobless rate drops to 3.2% record low in Q4 2021 on labor shortage

New Zealand wage growth missed at 0.7% vs 0.9% expected in Q4 2021

Upcoming Potential Catalysts on the Forex Economic Calendar:

Eurozone’s CPI flash estimate at 10:00 am GMT
U.S. ADP report at 1:15 pm GMT
Canada’s building permits at 1:30 pm GMT
U.S. crude oil inventories at 3:30 pm GMT
AU building approvals at 12:30 am GMT (Feb 3)
AU quarterly business confidence at 12:30 am GMT (Feb 3)
AU trade balance at 12:30 am GMT (Feb 3)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart

USD/JPY 1-hour Forex Chart

The dollar had fallen by a hundred pips or so against the yen since last Friday thanks to cautious risk-taking and maybe a bit of end-of-month profit-taking.

USD/JPY is now down to the 114.60 zone that lines up with the 50% – 61.8% Fibonacci retracement of last week’s upswing.

More importantly, 114.60 is close to the trend line support and 200 SMA on the 1-hour time frame.

Let’s see if today’s market themes will bust USD/JPY out of its current consolidation.

The ADP report is expected to reflect a slowdown in hiring after a strong couple of months. A weaker-than-expected release may impact the Fed’s aggressive policy tightening schedule and inspire risk-taking across the board.

Of course, we can also see the dollar weaken against the yen. Look out for headlines like lower Treasury yields or overall dollar-selling in case a bearish momentum drags USD/JPY below the chart’s 200 SMA and trend line support.