USD/JPY Fundamental Forecast – September 5, 2016

The USD/JPY added 12 point to trade at 103.34 but remaining range bound after the yen gave up some strength as the new month started. Traders are back from summer holidays and ready to book profits leading into the winter season. The yen eased as traders moved away from safe havens and prepare for the Nonfarm payroll report today. The dollar was on the back foot this morning after taking a tumble following a surprise contraction in U.S. manufacturing, which cast some doubts on the strength of U.S. economic growth ahead of closely-watched employment data later in the day.

ISM reported that its index of factory activity fell 3.2 percentage points to a reading of 49.4, the first contraction since February. The result was a setback for dollar bulls, who had bet solid U.S. data this week would cement the case for an early rate hike by the Federal Reserve.

The dollar slipped to 103.35 yen after having climbed to as high as 104.00 yen, its highest level in over a month, on Thursday. The dollar index slipped to 95.664, though itis still above its low so far this week of 95.479, with its fate seen hinging on the looming jobs data.

Bloomberg reported that Bank of Japan Governor Haruhiko Kuroda repeated over the weekend that there remains “ample space for additional easing” under the existing policy framework. Data last week showed consumer prices in Japan fell for a fifth straight month, underscoring the central bank’s struggle to spur inflation to its 2 percent target.

“Dollar-yen remains supported from Fed expectations underpinning the dollar, and pressure on Kuroda to keep the pedal to the metal on stimulus rhetoric,” Stephen Innes, a senior trader at Oanda Corp. in Singapore, wrote in a note. “Position adjustment ahead of tonight’s critical non-farm payrolls should dominate today’s foreign-exchange landscape.”

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 September 5, 2016

Government Bond Auctions

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Sep 06 11:00 Austria Holds bond auction

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