The US dollar has rallied significantly during the trading session on Thursday, breaking above the ¥110.50 level. As I record this, we are pulling back slightly after a less than stellar ADP jobs number, but remember that’s not the official figure, and therefore only gives us an idea as to how things may turn out today. At the end of the day, I think that this pair will be paying attention to not only the jobs number and whether they are good or not, but also how the trade war rhetoric continues. If we can get some type of reconciliation, this market will probably skyrocket. However, it currently looks as if we are almost certain to see more tariffs slapped on the Chinese by the Americans, so I think that will continue to weigh upon this market.
Don’t forget the correlation between the S&P 500 and the USD/JPY pair, as the two will tend to move in the same direction as well. If stock markets are rallying, that’s generally a sign of positivity as far as risk appetite is concerned, so if it happens, this pair tends to rally as the Japanese yen is the ultimate safety currency. For now, it looks as if we are trying to go to the upside overall, but obviously the headlines have worked against us when it comes to Chinese and American officials. Given enough time though, it does look as if the slightest bit of good news will send this market higher.