USD/JPY: Bid in Tokyo on Central Bank Divergences
USD/JPY
is on the up in the Tokyo open with Japan finally back for a full
week's work this week. The price is bid at the highest level since the
end of April's business at 107.64 the high so far.
The greenback
carries on making advances across the board, despite last week's miss in
the headline for nonfarm payrolls and negativity in the background of
the number. What is compelling is how the market essentially ignored the
headline miss, apart from the initial knee-jerk, and did not pay
attention to the detail.
Nonfarm payrolls - what's in the detail?
The
markets got one of the weakest reports in the last couple of years,
with 160k net and a revised March report of 215k-208k. Hourly earnings
increased 0.3%, but last month's 0.3% was revised to 0.2%. The
participation rate was 63 last, a move up, but in April that came down
to 62.8, so 562k people left the labour force during the month of April.
What is alarming is whether part-time and lower paid jobs are
being added while top end higher-paid work is being lost. Stocks were
down initially, but then rallied on the back of the odds falling to
practically zero that the Fed can hike this year, let alone in June.
However, the dollar catches a bid on Central Bank differentials still
while markets still continue to bet on the Fed raising rates at some
stage, or at least on hold short-term while other Banks, such as the
RBA, BoJ, are forecasted to cut.
Further reading on divergence US-Japan yield spread
USD/JPY levels
Despite
the bid today, Valeria Bednarik explained that the pair maintains a
clear negative tone from a technical point of view, "given that in the
daily chart, the Momentum indicator heads south well below the 100
level, whilst the RSI indicator has resumed its decline near oversold
territory," adding, "Also, the 100 DMA has extended its decline far
above the current level while widening the distance with the 200 DMA,
indicating bears are still in the driver´s seat."
