© Dukascopy Bank SA
Last week Dukascopy Community members voted strongly to expect the US Dollar's rally against the Japanese Yen, namely in 75% of all cases. Most likely, such a sentiment was predominantly caused by the decision of the Bank of Japan to cut interest rates into the negative territory, by 20 bps to –0.10%. On the other hand, bullishness of the Asian currency revived relatively quickly, and by Monday USD/JPY has become the subject to losses. The currency pair was losing value every single day in course of the period and it retreated by around 500 pips in just five days. The Yen has not only recovered all BOJ-caused moves down, but also overshot the 117 mark to close the week near 116.50. Additional bearish momentum was initiated by soft employment data from the world's largest economy on Wednesday. It was the first (ADP) reading for US payrolls numbers for the first month of 2016. It showed a rise of NFP of 205,000 in January, while official Labour Department numbers on Friday booked an even darker picture of just 151,000 jobs generated last month. The Friday's statistical release was still positively priced in by the market due to rising wages and unemployment rate below 5%. However, it failed to raise the probability of a March rate hike by the Fed from the current level of only 10%.
Over the week market sentiment improved for the benefit of USD/JPY's bears. At the same time, a fragile majority (52%) of all participants in the quiz see the Buck rebounding in the period of February 5-12. Mentioned before, the Humphrey-Hawkins testimony of Janet Yellen is the most closely watched economic event this week. Some influence is definitely expected on the observed currency pair, while by Friday our Dukascopy traders foresee the exchange rate to close near 116.80.
© Dukascopy Bank SA