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Forex Analysis: US Dollar May Rise Against Yen on US Jobs Data

By , Currency Analyst
07 December 2012 10:16 GMT

THE TAKEAWAY: The US Dollar may rise against the Japanese Yen if November’s US employment figures top economists’ dismal expectations.

Forex traders will be closely watching US Employment figures set to cross the wires at 13:30 GMT. Economists are expecting nonfarm payrolls to rise 85,000 in November, representing a sizeable drop from October’s print of 171,000 and marking the weakest result in five months.

While a drop in the number of jobs added seems almost a given courtesy of hurricane Sandy, rock-bottom expectations and mixed signals from key economic data leave room for an upside surprise. Such an outcome may prove supportive for US yields, pushing the Dollar higher against the Japanese Yen.

November’s Non-Manufacturing ISM report beat economists’ expectations and revealed that employment in the service sector – which employs close to 80 percent of Americans – continued to grow (albeit at a slower pace than in October).

In addition, anecdotal evidence from the Fed’s Beige Book survey pointed to resilience in US economic growth despite the impact of Sandy and concerns over the “fiscal cliff”. US consumer confidence also continued to improve while activity in other sectors including the auto industry picked up over the same period.

The evidence is far from uniformly rosy however. Indeed, initial jobless claims jumped in the beginning of November while unexpected weakness emerged in the manufacturing sector, where employment shrank for the first time since September 2009. Still, with expectations as low as they are, it appears the greater risk for volatility is on the upside.

USD/JPY Daily

S1 81.677, S2 81.268, S3 80.695

R1 82.745, R2 83.500, R3 84.160

USD/JPY has been trading in a range above support at 81.677 and below resistance at 82.740. A daily close above the range top is needed to open the door for a further push higher to the next level of resistance at 83.500, the 123.6% Fibonacci expansion. Support below the trading range rests at 81.268, followed by 80.695.

Forex_Analysis_US_Dollar_May_Rise_Against_Yen_on_US_Jobs_Data_body_Picture_2.png, Forex Analysis: US Dollar May Rise Against Yen on US Jobs Data

Created using FXCM Marketscope, Prepared by David de Ferranti

USD/JPY Hourly

S1 82.292, S2 82.046, S3 81.713*

R1 82.545, R2 82.745, R3 83.360

On a shorter-term basis, a close above 82.545 is needed to clear the way for a move to strong resistance at 82.745. A further push above that likely marks a significant break to the upside, with the next notable level of resistance at 83.366. A break below the upward channel may signal a fall to near-term support at 82.292, with the next downside barrier at 82.046.

Forex_Analysis_US_Dollar_May_Rise_Against_Yen_on_US_Jobs_Data_body_RfQR_dTGoV_UgKcGsXuprPK276IYbNKAyKwbclPJpf6rkPa_Z7fzaqjFt2c_D8hnq1Mw1x5JvugvxMjK.png, Forex Analysis: US Dollar May Rise Against Yen on US Jobs Data

Created using FXCM Marketscope, Prepared by David de Ferranti

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07 December 2012 10:16 GMT