Yen Subdued As Markets Eye U.S. Payrolls, Wage Growth

 | Dec 02, 2016 05:36AM ET

USD/JPY is almost unchanged on Friday, as the pair trades at 113.60. On the release front, the spotlight is on US employment numbers, with three key releases – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate. There are no Japanese events on Friday. Traders should be prepared for some volatility in the currency markets during the North American session.

It was a dismal month of November for the yen, as the US dollar ran roughshod over the Japanese currency. USD/JPY surged 9.4 percent, as the yen dropped to 10-month lows. The dollar has been a tear since the election of Donald Trump and a very likely rate hike by the Federal Reserve this month could extend the misery of the struggling Japanese yen. Japanese policymakers are not unhappy about the sliding yen, which has given a boost to the weak export sector.

The spotlight is on Friday’s US employment reports. The US labor market has been red-hot and is close to capacity. Solid job numbers have boosted market expectations for a rate hike next week, which is considered a virtual certainty (the markets have priced in a rate hike at over 90%).

Traders will want to keep a close eye on today’s indicators, as any unexpected readings can have a sharp impact on the currency markets. We could see mixed numbers, with Nonfarm Payrolls expected to improve to 177 thousand, while Average Hourly Earnings, which measure wage growth, is expected to dip to 0.2%. On Thursday, unemployment claims were unexpectedly high, climbing up to 268 thousand, the highest level since July. Still, the 4-week averages continue to point to very low levels for jobless claims.

NFP Still Important Despite Upcoming Rate Hike

USD/JPY Fundamentals

  • 13:30 US Average Hourly Earnings. Estimate 0.2%
  • 13:30 US Nonfarm Employment Change. Estimate 177K
  • 13:30 US Unemployment Rate. Estimate 4.9%
  • 13:45 US FOMC Member Lael Brainard Speech
  • 18:00 US FOMC Member Daniel Tarullo Speech

*All release times are EST

*Key events are in bold

USD/JPY for Friday, December 2, 2016