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FOREX: Greenback Advances as Trump Tariff Announcements Awaited Next Week

FOREX
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  • U.S. businesses created fewer jobs in January than the previous month and market forecasts, but the unemployment rate unexpectedly dipped a tenth to 4.0%, reinforcing the Federal Reserve's propensity to keep rates on hold for now. This dynamic provided sharp two-way swings for the greenback following the data.
  • Initially, the US dollar gapped lower and prompted a 151.35 print for USDJPY. However, there was a very swift reversal which took the pair to a fresh session high of 152.42 just 1 minute after the release.
  • This mixed sentiment prompted the USD index to oscillate around unchanged levels in the following hours, however, as Trump headlines began to cross, the USD remained on the front foot for the majority of the late Friday session.
  • A plethora of tariff related headlines prompted a lot of noise in G10 currency markets, however, the underlying message that announcements will be made on reciprocal trade has bolstered a risk off theme, supporting haven currencies.
  • The euro was hard hit during the flurry of messaging, with EURUSD extending the pullback from 50-day EMA resistance to around 1.4%, a level that was firmly rejected during Wednesday’s session. This renewed weakness places the focus back on 1.0272, the Feb 4 low.
  • For EURJPY, weakness today briefly extended the week’s decline to around 3.05%. Price action saw the cross pierce key support at 156.18, the Dec 3 low. Below here, greater attention will be on the medium-term cluster of support between 153.27 and 154.46.
  • JPY strength has been a key development of currency markets this week amid a relatively more hawkish BOJ narrative, and USDJPY has had two tries below the 151 handle on Friday. A solid bounce has ensued on both occasions with market participants citing an oversold condition for the pair and a late mention from Trump that tariffs on Japan are an option.
  • Global FX markets will continue to be primarily driven by tariff related developments, however, Chinese CPI/PPI data is also due this weekend. 
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  • U.S. businesses created fewer jobs in January than the previous month and market forecasts, but the unemployment rate unexpectedly dipped a tenth to 4.0%, reinforcing the Federal Reserve's propensity to keep rates on hold for now. This dynamic provided sharp two-way swings for the greenback following the data.
  • Initially, the US dollar gapped lower and prompted a 151.35 print for USDJPY. However, there was a very swift reversal which took the pair to a fresh session high of 152.42 just 1 minute after the release.
  • This mixed sentiment prompted the USD index to oscillate around unchanged levels in the following hours, however, as Trump headlines began to cross, the USD remained on the front foot for the majority of the late Friday session.
  • A plethora of tariff related headlines prompted a lot of noise in G10 currency markets, however, the underlying message that announcements will be made on reciprocal trade has bolstered a risk off theme, supporting haven currencies.
  • The euro was hard hit during the flurry of messaging, with EURUSD extending the pullback from 50-day EMA resistance to around 1.4%, a level that was firmly rejected during Wednesday’s session. This renewed weakness places the focus back on 1.0272, the Feb 4 low.
  • For EURJPY, weakness today briefly extended the week’s decline to around 3.05%. Price action saw the cross pierce key support at 156.18, the Dec 3 low. Below here, greater attention will be on the medium-term cluster of support between 153.27 and 154.46.
  • JPY strength has been a key development of currency markets this week amid a relatively more hawkish BOJ narrative, and USDJPY has had two tries below the 151 handle on Friday. A solid bounce has ensued on both occasions with market participants citing an oversold condition for the pair and a late mention from Trump that tariffs on Japan are an option.
  • Global FX markets will continue to be primarily driven by tariff related developments, however, Chinese CPI/PPI data is also due this weekend.