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Yen to Rise as US Dollar Falls if Payrolls Data Disappoints

Yen to Rise as US Dollar Falls if Payrolls Data Disappoints

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Asian FX Finds Divergent Paths in Conflicting Indications of Risk Appetite
  • Japanese Yen to Rise, US Dollar to Decline if Payrolls Data Underperforms
  • See Economic Releases Directly on Your Charts with the DailyFX News App

Currency markets diverged in overnight trade. The sentiment-geared Australian and New Zealand Dollars traded alongside Asian stock exchanges, where shares followed Wall Street upward. The MSCI Asia Pacific regional benchmark equity index added 0.8 percent. Meanwhile, the Yen opted to follow more forward-looking risk appetite cues emanating from S&P 500 futures. Contracts on the US stocks yardstick declined, seemingly fueling safety-linked demand for the Japanese unit.

Looking ahead, traders are likely to dismiss a European calendar peppered with second-tier releases to focus on December’s US Employmentreport. The data set is due to show the economy added 240,000 jobs last month, marking a slowdown from the 321,000 increase posted in November. Leading survey data reinforces the probability of a downturn, pointing to significant slowdown in hiring growth in the services sector (which accounts for close to 80 percent of US employment).

Furthermore, US economic news-flow has deteriorated relative to expectations over recent weeks, suggesting analysts are overestimating the economy’s vigor and opening the door for a downside surprise. Such an outcome may push back Federal Reserve interest rate hike expectations, weighing on the US Dollar. It may likewise undermine risk appetite as traders fret that softening US performance will fall short of offsetting malaise in Europe and Asia, fueling further Yen gains.

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Asia Session

GMTCCYEVENTACTEXPPREV
21:45NZDBuilding Permits (MoM) (NOV)10.0%-9.8%
22:30AUDAiG Perf of Construction Index (DEC) 44.4-45.4
23:50JPYOfficial Reserve Assets ($) (DEC)1260.5B-1269.1B
0:30AUDRetail Sales s.a. (MoM) (NOV)0.1%0.2%0.4%
1:30CNYProducer Price Index (YoY) (DEC)-3.3%-3.1%-2.7%
1:30CNYConsumer Price Index (YoY) (DEC)1.5%1.5%1.4%
5:00JPYCoincident Index (NOV P)108.9-109.9
5:00JPYLeading Index (NOV P)103.8-104.5

European Session

GMTCCYEVENTEXP/ACTPREVIMPACT
6:45CHFUnemployment Rate (DEC)3.4%3.2%Low
6:45CHFUnemployment Rate s.a. (DEC)3.1%3.1%Low
7:00EURGerman Industrial Production (MoM) (NOV)0.3%0.2%Medium
7:00EURGerman Industrial Production (YoY) (NOV)-0.6%0.8%Medium
7:00EURGerman Trade Balance (€) (NOV)20.5B22.1BMedium
7:00EURGerman Current Account (€) (NOV)23.0B23.1BLow
7:00EURGerman Exports s.a. (MoM) (NOV)-1.5%-0.5%Low
7:00EURGerman Imports s.a. (MoM) (NOV)0.5%-3.1%Low
8:15CHFConsumer Price Index (YoY) (DEC)-0.2%-0.1%Medium
8:15CHFConsumer Price Index (MoM) (DEC)-0.4%0.0%Medium
8:15CHFCPI EU Harmonized (YoY) (DEC)-0.1%0.1%Medium
8:15CHFCPI EU Harmonized (MoM) (DEC)-0.3%-0.3%Medium
9:30GBPTrade Balance Non EU (£) (NOV)-3475M-3582MLow
9:30GBPTotal Trade Balance (£) (NOV)-2000M-2024MLow
9:30GBPVisible Trade Balance (£) (NOV)-9500M-9620MLow
9:30GBPIndustrial Production (MoM) (NOV)0.2%-0.1%Medium
9:30GBPIndustrial Production (YoY) (NOV)1.6%1.1%Medium
9:30GBPManufacturing Production (MoM) (NOV)0.3%-0.7%Medium
9:30GBPManufacturing Production (YoY) (NOV)2.3%1.7%Medium
9:30GBPConstruction Output s.a. (YoY) (NOV)6.7%0.7%Low
9:30GBPConstruction Output s.a. (MoM) (NOV)1.2%-2.2%Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.16101.17041.17491.18051.17981.18431.1892
GBPUSD1.49151.49981.50441.50931.50811.51271.5164

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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