USD/JPY Fundamental Daily Forecast – Dollar Recovers From Knee-Jerk Selling after Jobs Report
The Dollar/Yen is recovering from early session weakness. It’s being support by increased demand for higher risk. Earlier in the session, the USD/JPY was under pressure with the selling fueled by disappointing U.S. jobs data.
Traders initially sold the U.S. Dollar against the Yen in a knee-jerk reaction to Labor Department data showing Non-Farm Payrolls increased by 156,000 in August, below the 180,000 forecast
A slight uptick in the unemployment rate and tepid wage growth also briefly sent the dollar lower.
The price action suggests that investors may think it’s premature for the markets to discount a December Fed rate hike.
The U.S. Non-Farm Payrolls report showed the economy added 156,000 new jobs last month, below the 180,000 forecast. Last month’s number was also revised lower to 189,000.
The unemployment rate rose slightly to 4.4%, up from 4.3%. Finally, Average Hourly Earnings rose only 0.1%, below the 0.2% forecast and 0.3% previous read.
In other news, Final Manufacturing PMI was higher than expected at 52.8. The more important ISM Manufacturing PMI also beat expectations with a read of 58.8.
Revised University of Michigan consumer sentiment came in below expectations at 96.8. Construction spending disappointed with a -0.6%.
Some of the earlier pressure was provided by Treasury Secretary Steven Mnuchin on Thursday. He told CNBC that a weaker dollar might have disadvantages for U.S. trade.
Based on the price action, a Fed rate hike later this year is still a question market although the odds remain under 50/50.
The U.S. markets are closed on Monday because of a bank holiday so profit-taking and position-squaring may have also helped drive the USD/JPY higher.
This article was originally posted on FX Empire
