It’s NFP day, yo!
With not a lot of major data releases due in early London trading, I got my eyes on USD/JPY approaching a key inflection point.
Before we talk setups, lemme list down the top headlines from the late U.S. and early Asian session trading:
- Australia’s sales boost services sectors over summer holiday period
- RBA Gov. Lowe: rates will remain low for “quite a while yet”
- RBA sets out three scenarios for outlook
- Victoria led Australia’s retail recovery through the December quarter – but ABS data suggests things won’t stay festive for long
- Japan’s December household spending falls as recovery stalls
- World shares close in on record peak as vaccines fuel normalization hopes
- Dollar set for best week in three months as pandemic recoveries diverge
- AUD eases, poised for weekly loss; NZD down too
Upcoming Potential Catalysts on the Economic Calendar:
- Japan’s leading indicators at 5:00 am GMT
- Germany’s factory orders at 7:00 am GMT
- France’s trade balance at 7:45 am GMT
- U.K.’s Halifax house price index at 8:30 am GMT
- Italy’s retail sales at 9:00 am GMT
- BOE’s Bailey to give a speech at 12:15 pm GMT
- U.S. NFP reports at 1:30 pm GMT
- Canada’s labor market data at 1:30 pm GMT
What to Watch: USD/JPY
Positive earnings reports, higher U.S. Treasury yields, and optimism over Uncle Sam’s post-pandemic growth prospects have pushed the dollar higher across the board so far this week.
USD/JPY, in particular, has already gained about 80 pips in the last few days alone.
The pair is now near the 105.50 area that lines up with the 200 SMA on the daily time frame.Thing is, the 106.00 major psychological handle and key support and resistance level is not too far from the current prices.
If today’s non-farm payrolls (NFP) reports hint at a faster-than-expected recovery for the U.S. economy, then we could see USD/JPY break above 106.00 and maybe start a longer-term uptrend.
But if the NFP numbers disappoint, or if the market’s optimism turns into an anti-dollar party, then USD/JPY could find resistance at the 200 SMA and dip back down to the 100 SMA levels.