Mid-Day Report: Yen Sharply Lower as NFP Beats Expectations

The Japanese yen is sold off sharply in early US session after slightly better than expected job report from US. Investors once again turn positive on economic recovery and bid up stocks futures. Dollar manages to climb against Euro and Swissy but the strength is so far limited as most major currencies are supported by buying in respective yen crosses. Indeed, Australian dollar rebounds strongly against US dollar as AUD/JPY rose sharply through 81 level. Crude oil also spikes higher to 81.34.

Non-farm payrolls report showed job market in US contracted by -36k in February, less than expectation of -40k, even though January's figure was revised down from -20k to -26k. More importantly, unemployment rate stayed unchanged at 9.7% versus consensus of a rise to 9.8%. Data released earlier today saw UK PPI input rose 0.1% mom, 6.9% yoy in February with output PPI up 0.3% mom, 4.1% yoy. Core PPI rose 2.9% yoy. Germany Factory orders rose 4.3% mom, 19.6% yoy in January.

Dollar index jumps up to as high as 80.88 after NFP release, thanks to rally against Euro and yen. We'd continue to favor more upside as long as 80.45 minor support holds. Break of 81.34 resistance will confirm that recent rally has resumed for 82.63 resistance next. Nevertheless, below 80.45 will suggests that dollar index is still in sideway consolidation that started at 81.34. But after all, we'd expect 79.56 cluster support holds (38.2% retracement of 76.60 to 81.34 at 79.52) to hold.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 88.36; (P) 88.81; (R1) 89.47; More.

USD/JPY's strong break of 89.51 resistance indicates that fall from 92.14 should have completed at 88.13 already. Intraday bias is now on the upside for near term falling trend line resistance, (now at 91.64). Break there will argue that fall from 93.74 has completed with three waves down to 88.13 and will turn focus to 92.14 resistance for confirmation. On the downside, below 89.31 minor support will indicate that rebound from 88.13 is completed and will turn bias back to the downside.

In the bigger picture, note that USD/JPY is now back below 55 days EMA (now at 90.44) and continue to stay below 55 weeks EMA (now at 93.42). The bearish case that longer term down trend from 124.13 is still in force remains in favor. Break of 87.36 support will solidify this case and target a new low below 84.81, possibly to 1995 low of 79.5. On the upside, note that decisive break of 93.74 resistance will also have 55 weeks EMA (now at 93.42) firmly taken out too and that will be an important signal that whole long term down trend from 2007 high of 124.13 is over. In such case, focus will turn to 101.43 resistance for confirmation.

Economic Indicators Update

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