USDJPY Analysis
| Performance after Thursday | |||||
| Period | Pct | Chg | Momentum | ||
| Thursday | -0.63% | -96.4 Pips |  |
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| Week to-date | -2.53% | -392.901 Pips | |
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| February | -1.73% | -266.3 Pips |  |
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Upcoming key events (London Time)
Fri 01:30 PM USD Nonfarm Payroll Employment
What happened lately
In the United States, the Bureau of Labor Statistics reported that the unit labor costs witnessed a significant increase in the fourth quarter, with a rise to 3% from 0.8% in the third quarter. This surge indicates heightened labor costs for businesses, which could potentially lead to increased prices for goods and services, contributing to inflationary pressures. Additionally, the Department of Labor noted an increase in initial unemployment insurance claims, which rose to 219,000 in the week ending February 1st, up from a revised figure of 208,000 in the previous week. This rise suggests a slight weakening in the labor market. Meanwhile, the nonfarm business labor productivity for the fourth quarter experienced a decline, with figures dropping to 1.2% from 2.2% in the third quarter, indicating reduced efficiency and output per labor hour.
In Japan, the Ministry of Health, Labour and Welfare reported a substantial increase in total cash earnings as per the monthly labor survey. The 12-month comparison for December revealed a jump to 4.8%, up from 3% in November. This increase in earnings suggests better compensation for workers, potentially boosting consumer spending capacity and overall economic activity.
The economic data from both the U.S. and Japan suggest contrasting labor market dynamics. The increase in U.S. unit labor costs, combined with rising unemployment claims and declining productivity, might contribute to inflationary concerns and potential economic slowdown, influencing monetary policy decisions. On the other hand, Japan’s increase in total cash earnings indicates a stronger remuneration environment.
The USDJPY exchange rate’s drop on Thursday by 0.63% to 151.40 reflects market reactions to the released data. The increased labor costs and weaker labor market indicators in the U.S. may weigh on the U.S. dollar as investors anticipate the potential for a less aggressive monetary stance from the Federal Reserve. Meanwhile, improving wage conditions in Japan support the Japanese yen, further contributing to the decline in USDJPY. As market participants continue to digest these economic indicators and upcoming nonfarm payroll employment data, further fluctuations in the USDJPY pair could be expected.
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What can we expect from USDJPY today?
USDJPY on Thursday dropped -0.63% to 151.40. Price is below 9-Day EMA while Stochastic is falling.
Updated daily direction for USDJPY looks bearish as the pair posted lower in Thursday trading session.
Looking ahead for the day, immediate support level is at 150.79 (S1) with break below could see further selling pressure towards 150.18 (S2). To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 152.90 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 151.23 would indicate selling pressure.
For the week to-date, take note that USDJPY is bearish as the pair posted lower by -2.53%.
Key levels to watch out:
| R3 | 154.12 |
| R2 | 153.51 |
| R1 | 152.46 |
| Daily Pivot | 151.84 |
| S1 | 150.79 |
| S2 | 150.18 |
| S3 | 149.13 |