Markets

FX: USDJPY Awaits NFPs

Data chart surrounded by $100 bills

Market Drivers August 04, 2017

Australian Retail Sales beat

Waiting for NFPs

Nikkei -0.38% Dax 0.08%

Oil $48/bbl

Gold $1269/oz.

Europe and Asia:

AUD Retail Sales 0.3% vs. 0.2%

North America:

USD NFPs 8:30

USD Trade Balance 8:30

CAD Labor Data 8:30

It's been a typically quiet pre-NFP night for FX as traders gear up for the marquee event of the week due at 12:30 GMT.

The consensus calls for NFPs is around 180K. A figure anywhere within that range should have minimal impact on trade whereas a print of 200K would be viewed as positive and anything below 150K could drive the buck even lower.

Pre-NFP data is mixed with ADP showing better than expected results, but the employment component of the ISM services pointing to a possible miss as that reading slipped more than 3 points since the month prior.

Aside from the pure labor data, the focus as always will be on wage growth with market anticipating average hourly earnings to rise by 0.3%. This, in many ways, will be a key metric to focus on. The bulls whole argument rests on the idea that with labor slack essentially gone, wages would have to rise which in turn would lift incomes and contribute to better growth in H2 of this year. So far that scenario has not panned out as wage growth has been far more muted than expected. It today's data shows average hourly earnings rising at 0.1% rate or less, the dollar is sure to take a hit as the market will once push the Fed funds expectations lower.

A lower print is likely to break the 110.00 support for USDJPY for good and could take pair towards 110.00-108.00 corridor as the pair makes 4-month lows. A better than expected reading, however, could unleash a monster short covering rally that could take the pair beyond 111.00 before trading ends for the week.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ForEx Economy

Boris Schlossberg

Mr. Schlossberg is a regular contributor to CNBC's Squawk Box and a commentator for CNBC Asia and CNBC Europe. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Mr. Schlossberg has written for SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is the author of Technical Analysis of the Currency Market and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game, both of which are published by Wiley

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