USD/JPY Enters Bullish Consolidation Phase Near August Highs
The USD/JPY pair is currently in a bullish consolidation phase, hovering near its highest level since August 19. Bulls are showing some hesitation in placing new bets as they await the release of the US Nonfarm Payrolls (NFP) report.
Factors Affecting USD/JPY Pair
- Uncertainty surrounding BoJ rate hike
- Reduced bets for a 50 bps Fed rate cut
As traders brace for the NFP report, which is expected to reveal job additions of 140K in September, the market is also watching the Unemployment Rate to remain at 4.2%. Additionally, Average Hourly Earnings data will provide insights into potential Fed rate cuts in November, influencing demand for the USD and impacting the USD/JPY pair.
Market Sentiment and Outlook
- Investors scaling back bets on aggressive Fed policy easing
- Reduced expectations for BoJ rate hikes in 2024
- Political uncertainty in Japan ahead of snap elections
Despite geopolitical risks in the Middle East, the USD/JPY pair is poised for strong gains for the second consecutive week. Unless there are major negative surprises in the US jobs data, the fundamental backdrop favors further upside potential.
Analysis of the Nonfarm Payrolls Indicator
The Nonfarm Payrolls release provides data on new job creation in the US, excluding the agricultural sector. This report, issued by the US Bureau of Labor Statistics, can trigger volatility in the forex market due to its monthly fluctuations. A high reading is bullish for the USD, while a low reading is bearish. However, market reaction depends on how the data is interpreted as a whole, considering previous revisions and the Unemployment Rate.
For more information on the Nonfarm Payrolls indicator, you can read more here.