Please note ThinkMarkets does not provide CFD services to residents of the US.

Please note ThinkMarkets does not provide CFD services to residents of the US.

Learn To Trade
 
Indicators & Chart Patterns

Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Find your detailed guides here
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn more
Knowledge Base

No matter your experience level, download our free trading guides and develop your skills.

Learn more
Learn To Trade

Trade smarter: boost your skills with our training resources.

Create a live account
Market Analysis
 
Market News

All the latest market news, with regular insights and analysis from our in-house experts

Learn more
Economic Calendar

Make sure you are ahead of every market move with our constantly updated economic calendar.

Learn more
Technical Analysis

Harness past market data to forecast price direction and anticipate market moves.

Learn more
Live Webinars

Boost your knowledge with our live, interactive webinars delivered by industry experts.

Register now
Special Reports

Engaging, in-depth macroeconomic analysis and expert educational content from our in-house analysts

Learn more
Market Analysis

Harness the market intelligence you need to build your trading strategies.

Create a live account
Partnership
 
Affiliate Programme

Grow your business and get rewarded. Find out more about our Affiliate Programme today.

Learn more
Introducing Broker

ThinkMarkets ensures high levels of client satisfaction with high client retention and conversion rates.

Learn more
Proprietary Trading

Partner with us to build your own prop trading business. Enquire with our account managers today.

Learn more
White Label

We supply everything you need to create your own brand in the Forex industry.

Learn more
Regional Representatives

Partner with ThinkMarkets today to access full consulting services, promotional materials and your own budgets.

Learn more
Refer a friend

Receive $50 for you and your friend when you convert them into an active trader of ThinkMarkets.

Learn more
Partnership

Plug into the next-gen platforms and the trades your clients want.

Partner Portal
About ThinkMarkets
 
Sponsorships

Check out our sponsorships with global institutions and athletes, built on shared values of excellence.

Learn more
About Us

Find out more about ThinkMarkets, an established, multi-award winning global broker you can trust.

Learn more
Careers

Discover a range of rewarding career possibilities across the globe

Apply now
ThinkMarkets News

Keep up to date with our latest company news and announcements

Learn more
Trading Infrastructure

When it comes to the speed we execute your trades, no expense is spared. Find out more.

Learn more
Contact Us

Our multilingual support team is here for you 24/7.

Learn more
About ThinkMarkets

Global presence, local expertise - find out what sets us apart.

Create a live account
Log in Create account

Non-farm Payrolls: What’s next for USD/JPY and US policy?

Alejandro Zambrano Alejandro Zambrano 06/03/2024
Non-farm Payrolls: What’s next for USD/JPY and US policy? Non-farm Payrolls: What’s next for USD/JPY and US policy?
Non-farm Payrolls: What’s next for USD/JPY and US policy? Alejandro Zambrano

USD/JPY jumped and gained in the four hours following the February non-farm payroll figures. The reason was simple: the US economy created 353K new jobs versus the forecasted figure of 175K.
   

If the stock indices were a proxy for the economy, then numbers would likely be good again. However, nothing is more complicated to predict than the outcome of the Non-farm payrolls.   
 

As for the report on Friday, economists project that 195K new jobs were created. Could the estimate be too low once more? Since December, we have had higher than-projected Non-farm payroll numbers.   
 

The chart above shows the projection in yellow and the outcome in purple. 
 

Wages are expected to increase by 4.3% from last year, a slower pace than the 4.5% in January. The unemployment rate is anticipated to remain at the very low level of 3.7%, a problem for the US central bank. The unemployment rate is too low, keeping inflation too high.    
 

To combat the high economic growth in the USA and lift the unemployment rate, US interest rates were increased. However, we do not see any weakness in the weekly US jobless claims figures, and leading economic indicators like the PMIs are pointing higher in the months ahead, suggesting that the unemployment rate will not rise just yet.   
 

What impact could this have on the US Dollar?   

 

Another strong NFP reading could delay the start of rate cuts in the USA. Fed funds futures are pricing in 25 bps rate cuts at the June 12 meeting, with a probability of 70%. A strong NFP reading could move the first rate cut to the July or September meetings. A break to the 150.93 level in USD/JPY could send the pair to 151.88 on better-than-expected figures.   
 

On the other hand, a very weak NFP reading will further increase the likelihood of a rate cut and lower the USD. In this scenario, USD/JPY could decline below 149.06 and send the price to the next support level at 147.73. It would also play well with the trend that the Bank of Japan is about to increase interest rates later this year. For now, the futures markets are giving it a 50% probably of a rate increase at the BoJ March rate meeting. 
  

Another market to watch is gold. As we wrote on Monday, the price is ready to soar and has indeed turned higher. I suspect a drop to the breakout point in $2088 will likely be met with cheers for late buyers. As for the pattern mentioned in the article linked above, it will remain active as long as the price trades above $2088.   
 

USD/JPY 4-hour chart 

 


Following our latest update, the USD/JPY pair dipped below 149.06 and touched the anticipated support level of 147.73. The currency's position at 13:05 GMT appeared slightly oversold, hinting at an impending rebound. However, the scenario remains fluid, with the Non-Farm Payrolls (NFP) report due in 24 hours.
 

Should the pair experience a decline towards the February low of 145.86 ahead of the NFPs but not trade below this level, a robust rebound could occur significantly if the NFP data surpass expectations.

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

Related articles:

Weekly outlook: From US inflation spikes to E...

By Alejandro Zambrano

15/04/2024

Weekly Brief: Oil Surges, Gold Hits Record, a...

By ThinkMarkets

08/04/2024

How to navigate Friday's NFP: special FX and ...

By Alejandro Zambrano

03/04/2024

Identify market movements for the week – 1 Ap...

By Mohamed Hassan

01/04/2024

RDDT soars: here are the levels to watch in c...

By Alejandro Zambrano

26/03/2024

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Back to top