ADP Jobs Miss
The Dollar remains under heavy selling pressure as we move through the back of the week. Yesterday’s weaker-than-forecast ADP employment print has exacerbated concerns over the health of the US labour market and added to uncertainty given that Friday’s NFP release will now be delayed due to the shutdown. Yesterday, the ADP number came in at -32k, worryingly below the 52k the market was looking for.
Downward Revisions
Additionally, the prior month’s number was revised down sharply from 51k to -3k. Given the heavy weakness we’ve seen in the NFP data sets in recent months, this week’s ADP number suggests we would have seen furtehr weakness this time around. With no view yet on when the shutdown is likely to end or when we will receive this delayed data, USD is vulnerable to a deeper move to the downside as traders scale up Fed rate cut expectations accordingly.
USDJPY Shorts
In terms of where best to express USD shorts, USDJPY remains a strong choice. Hawkish BOJ expectations mean there is very tradeable divergence between the Fed and the BOJ, favouring the Yen. At the same time, a rise in safe-haven demand for the Yen is further amplifying the losses we’re seeing in the pair. Looking ahead, there is room for the current rut to deepen as the shutdown drags on and the expected economic toll on the US grows.
Technical Views
USDJPY
The sell off in USDJPY has seen the pair falling back down to test support at the 146.81 level and the rising trend line off YTD lows. This is a key support zone and a break here will be firmly bearish turning focus to 144.32 as the next support to watch, in line with bearish momentum studies readings.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.