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USDJPY Soars Back Above 135.00 Following Stellar Payrolls

FOREX
  • The significant beat in US non-farm payrolls (+528k) plus a small upward two-month revision sees US jobs close the gap with pre-pandemic levels. In line with soaring front-end yields, the US Dollar sharply rallied following the release.
  • Despite being off its best levels, the USD index remains up 0.9% on Friday, as the market places a greater likelihood to continued aggressive tightening in September.
  • While, greenback gains were broad based following the release, the Japanese Yen was the main victim, extending a string of highly volatile trading sessions.
  • Despite briefly trading around 132.50 overnight, USDJPY had recovered back above 133 before the data and the release sparked a huge gap higher, with price action gaining momentum above the week’s highs at 134.55. Relentless demand saw the pair rally another big figure, breaching the 20-day EMA resistance and notably more than 500 pips above the Tuesday low print at 135.50. Price has since moderated to the 135.00 mark, however the pair remains up 1.6% for the session as markets reassert bullish sentiment.
  • Overall weakness in equities naturally weighed on the likes of AUD and NZD, retreating around 1%, however a smaller adjustment was seen in the Euro.
  • EURUSD feel from 1.0230 down to 1.0142 shortly after the data, however, downside momentum failed to emerge as EURJPY broke above the best levels of the week. Indeed, EURUSD has since pared a good portion of the move and sits just 50 pips below pre-announcement levels.
  • Next week’s calendar remains quiet ahead of Wednesday’s important US July CPI print.
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