The Japanese yen remains firm in a local jobs report, falls somewhat in softer industrial production data
The currency may be more interested in risk trends due to the BoJ persistent relaxation program
USD / JPY seems to be about to resume its rise, a lot of warning signs in the newspaper
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The Japanese yen did not pay much attention to another relatively solid local job report, but the USD / JPY may be about to reverse. In February, Japan's unemployment rate increased to 2.5% from 2.4%. However, that was less than the expected result of 2.6%. Meanwhile, the participation rate in the labor force increased to 60.8% from 60.5%, which is the highest since last October. The only disappointment was that the relationship between work and candidate fell to 1.58 from 1.59.
Only 20 minutes later, industrial production worse than expected also crossed the cables. There, production decreased to 1.4% YoY versus the 2.3% expected for the February preliminary estimate. That was the weakest result since October 2016. The m / m reading also fell short by 4.1% against the estimated 5.0%. With this data, the yen had a more substantial negative reaction. However, its movement was less than 0.1%.
In general, the Japanese yen seldom produces a significant reaction to local economic data. This is because the Bank of Japan is in the midst of a flexibilization program aimed at boosting inflation. Just the other day, Governor Haruhiko Kuroda mentioned that the central bank will continue with a strong monetary easing persistently. He added that he wants inflation in the midst of a virtuous economic cycle.
With that in mind, the anti-risk currency will probably continue to pay attention to the sentiment as it has been this week so far. Although yesterday the yen recovered as yields fell in a local 2-year government bond auction. Keep in mind the incoming holidays of Good Friday that can produce little liquid commercial conditions. Stock markets will close in countries such as Australia, Canada, New Zealand, the United Kingdom and the US. UU
TECHNICAL ANALYSIS USD / JPY: TAKE A BREAK BEFORE RESUMING MORE?
On a daily chart, the USD / JPY seems to be taking a break under the main short-term resistance levels after pushing up from the beginning of this week. The pair also formed a bullish reversal pattern of the morning star and was followed by confirmation through Wednesday's candle. Simultaneously, positive RSI divergence implied that the downward momentum was decreasing.
From here, USD / JPY will have to press above the descending trend line for January and the horizontal resistance at 106.98. A push up that exposes the maximum of March 13 at 107.29. If the pair keeps rising, it will face the 38.2% Fibonacci retracement at 108.49.
On the other hand, if prices fall, the trend line of June 2016 could hinder short-term support. A break below that exposes the Fibonacci extension from 23.6% to 105.37. Beyond that, the next target could be the extension of 38.2% in 104.18.
