MNI China Daily Summary: Friday, January 10

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FOREX: JPY Volatility in Focus as US Employment Report Awaited

FOREX
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  • Volatility for the Japanese Yen has been in focus early Friday following a Bloomberg sources piece suggesting that BoJ officials will discuss raising inflation forecasts at its January meeting. USDJPY traded from around 158.40 down to 157.63 on the back of the report, highlighting the growing intervention risks at these levels and the short-term fragility of holding JPY shorts.
  • USDJPY fell just shy of the Thursday lows at 157.58, however the weekly lows remain much further out at 156.24 should non-farm payrolls disappoint. A collection of highs between 158.40-55 represent a building area of short-term resistance, ahead of 159.45, the Jul 12 high.
  • For EURJPY, the 165.00 pivot capped the price action into year-end and the recent move down appears technically corrective at this juncture. The next support to watch lies at 160.54, 50.0% of the Dec 3 - 30 bull cycle.
  • GBPJPY took a hit down to 193.69, just 20pips shy of the 193.49 lows on Thursday. The cross has been consolidating recent weakness, bolstered by a break of trendline support on the rising fiscal concerns in the UK.
  • Elsewhere, the dollar index is unchanged as we approach the key labour market data in the US, with EURUSD holding close to 1.0300 into the NY session open. There has been some underperformance for Antipodean FX, with AUDUSD holding below 0.6200, and NZD/USD consolidating beneath 0.5600 as well, just above most recent lows of 0.5572. The October 2022 low at 0.5512 is the medium-term target for the move.
  • US Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror. The unemployment rate is broadly seen holding at 4.2%. Canadian jobs numbers are also due.
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  • Volatility for the Japanese Yen has been in focus early Friday following a Bloomberg sources piece suggesting that BoJ officials will discuss raising inflation forecasts at its January meeting. USDJPY traded from around 158.40 down to 157.63 on the back of the report, highlighting the growing intervention risks at these levels and the short-term fragility of holding JPY shorts.
  • USDJPY fell just shy of the Thursday lows at 157.58, however the weekly lows remain much further out at 156.24 should non-farm payrolls disappoint. A collection of highs between 158.40-55 represent a building area of short-term resistance, ahead of 159.45, the Jul 12 high.
  • For EURJPY, the 165.00 pivot capped the price action into year-end and the recent move down appears technically corrective at this juncture. The next support to watch lies at 160.54, 50.0% of the Dec 3 - 30 bull cycle.
  • GBPJPY took a hit down to 193.69, just 20pips shy of the 193.49 lows on Thursday. The cross has been consolidating recent weakness, bolstered by a break of trendline support on the rising fiscal concerns in the UK.
  • Elsewhere, the dollar index is unchanged as we approach the key labour market data in the US, with EURUSD holding close to 1.0300 into the NY session open. There has been some underperformance for Antipodean FX, with AUDUSD holding below 0.6200, and NZD/USD consolidating beneath 0.5600 as well, just above most recent lows of 0.5572. The October 2022 low at 0.5512 is the medium-term target for the move.
  • US Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror. The unemployment rate is broadly seen holding at 4.2%. Canadian jobs numbers are also due.