November marked the 10th consecutive month that employment growth exceeded 200,000, the longest streak since 1994, and confirmed the US economy is withstanding slowdowns in China and the Euro zone, as well as a recession in Japan. There is evidence the improving labour market conditions start to spur faster wage growth, a key indicator that will determine the timing of the Fed's first rate hike. Average hourly earnings climbed by 9 cents in November, which left them up 2.1% from the previous year, still well below the advance of 3% or more that economists say would make the Fed comfortable raising benchmark overnight rates from all-time low, where they have been since December 2008.
Japan's economy contracted more than previously estimated, giving the government more reasons to
proceed with the plan to delay the next sales tax hike and hold an early election. The nation's
economy shrank 1.9% in annual terms in the third quarter, according to revised data, which underlined
that the hit from April's sales tax increase turned out to be more devastating than expected. On a
quarter-to-quarter basis, the Japanese economy contracted 0.5% in the July-September period, compared
with a preliminary estimate of a 0.4% slowdown. The world's third-largest economy technically remains
in recession, marked by two quarters in a row of GDP contraction.
Yen remains weak after nation's GDP release
This morning came with disappointing news from Japan that once again hurt the currency pair. Not many medium or high importance data will be released this week; therefore, most likely the traders' will rely on the previously seen data, that have been negative for Japan and positive for United States.USD/JPY continues to reach new highs
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, at the second part of August the Greenback started to outperform the Japanese peer rather heavily. Currently, the pair has breached the 120 mark and for the time being it is supported by the support line and monthly R1 near the 121 mark, if this level holds then we might see the pair climbing even higher. Nonetheless, in case these levels do not hold the selling pressure then the pair is likely to slide below the psychological level of 120.Daily chart
The Greenback continues to reach new highs this year and most likely it will continue to do so, if the pair will remain supported by the bullish trend-line. Since the pair is still showing bullishness, we see the pair targeting the weekly R1 and monthly R2 at 122.86/123.16 this week. At the same time technical indicators are mixed and pointing sideways.
Hourly chart