US Dollar Jumps After NFPs Thump Expectations, Gold Hits a One-Month Low

Japanese Yen Prices, Charts, and Analysis

• Japanese services PPI moves sharply higher.
• USD/JPY still under threat from official intervention.

One gauge of Japanese inflation rose by more than forecast in April, denting recent Japanese Yen weakness. The April services PPI reading accelerated by 2.8% y/y, beating expectations of 2.3% and an upwardly revised 2.4% in March. Today’s reading showed the sharpest rate of increase since March 2015. Today’s data will have been noted by the Bank of Japan as they look for customer inflation to become entrenched so they can start to reverse their multi-decade, ultra-loose monetary policy .

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While USD /JPY continues to print higher lows off the late-December low, the series of higher highs is currently broken and may well stay that way under threat of official intervention. For the pair to move lower, a break of both the 20-day and 50-day smas, at 155.58 and 154.20 respectively, needs to happen. Below here, support is seen just below 152.00. A move higher will find resistance at 158.00 and the April 29, multi-decade spike high at 160.21.

USD/JPY Daily Price Chart

Retail trader data show 26.27% of traders are net-long with the ratio of traders short to long at 2.81 to 1.The number of traders net-long is 2.70% higher than yesterday and 3.73% lower from last week, while the number of traders net-short is 1.70% higher than yesterday and 5.02% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise.

Markets Week Ahead: Gold, EUR/USD, GBP/USD, USD/JPY, Eurozone Inflation, US Core PCE

GBP/JPY continues to push higher on the back of Sterling strength. Recent UK economic data has pushed back the timing of the first UK rate cut, with the first 25 basis point move lower now seen in November., although a move at the September meeting cannot be ruled out.

This hawkish push-back has propped up Sterling and helped push USD/JPY back to the 200 level and within touching distance of levels last seen in August 2008. A confirmed break higher could see GBP /JPY test 202 ahead of 205. Again, Japanese officials will be wary of allowing the Yen to weaken further.

GBP/JPY Daily Price Chart

The EUR/JPY looks similar to the GBP/JPY chart although the macro picture is different. The ECB is fully expected to cut interest rates by 25 basis points at next week’s central bank meeting and this may temper further upside in the pair.

GBP/JPY Daily Price Chart