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USD Surges Higher Following Bumper Payrolls Data, JPY & NZD Pressured

FOREX
  • A much higher-than-expected increase in nonfarm payrolls, a dip in the unemployment rate and a boost for average hourly earnings contributed to a sharp move higher for both US yields and the greenback on Friday. An initial gap higher for the USD index (+0.85%) extended into late session trade, and looks set to close around 104.00, the highest level since mid-December.
  • Continued sensitivity to core rates leaves the Japanese yen as the joint poorest performer in G10 on Friday, alongside the New Zealand dollar. USDJPY’s impressive 150-pip jump in the aftermath of the US data was briefly capped around the 148.00 figure, however, the pullback remained very shallow, and the pair then extended gains above the figure in mid0afternoon trade.
  • Price action sees USDJPY rise 1.28% on the session, narrowing the gap with the January highs which reside at 148.80, closely followed by 149.16, a Fibonacci retracement. The trend outlook is unchanged and remains bullish, moving average studies have recently crossed and are now in a bull-mode set-up. This reinforces the current trend condition and highlights positive market sentiment. For reference, notable levels further out include 149.75 and 150.78, the November 22 and 17 highs respectively.
  • For Kiwi, bearish price action across January was re-established with the 20 and 50-day EMA acting as solid resistance overall in NZDUSD. The pair made a new low on the year by 3 pips, reaching the 100-day SMA in late trade.
  • Overall, the greenback had some volatile swings this week. Initial weak US data and regional bank concerns weighed before being trumped by a moderately hawkish Fed, who appeared to set a high bar to a March cut, and then by the much firmer-than-expected employment data.
  • China Caixin Services PMI headlines the APAC docket on Monday before the focus turns to US Services PMI data, scheduled later in the session.
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