Mid-Day Report: NFP Shows Solid Private Job Growth, Yen Tumbles, Commodity Currencies Soar

The Japanese yen is sharply lower in early US session after release of better than expected non-farm payroll report from US. Commodity currencies also soar broadly on risk appetite. European majors are relatively steady and Swiss Franc is indeed dropping sharply following yen. The headline non-farm payroll number showed -54k contraction only comparing to expectation of -105k. Prior month's number was also revised up to -54k. More importantly, private sector job market showed 67k expansion versus expectation of around 40k while prior month's data was also revised up to an impressive 107k. Unemployment rate climbed from 9.5% to 9.6% as expected and is ignored by the markets. Markets will now face another test of ISM services later in US morning.

Release earlier today, UK PMI services dropped more than expected to 51.3 in August and sent sterling lower against Euro. Eurozone services PMI was revised mildly up to 55.9 in AUgust. retail sales grew 0.1% mom , 1.1% yoy in July. Swiss CPI was flat mom, rose 0.3% yoy in August.

CAD/JPY follows risk appetite in US session and jumps sharply. Consolidation above 78.52 is still in progress and more upside should be seen to 82 and above. But after all, we'd still expect upside to be limited by 83.48 resistance and bring resumption of the whole fall from 94.46.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 83.99; (P) 84.27; (R1) 84.55; More.

USD/JPY's rebound from 83.66 extends further today and reaches as high as 85.20 so far in early US session. It now looks likely that such rebound is the third leg of consolidation from 83.61. Intraday bias will now be cautiously on the upside and further rise should be seen to 85.89 resistance and above to continue the consolidations. Though, we'd still expect upside to be limited well below 88.25 support turned resistance and bring another fall. On the downside, decisive break of 83.61 will confirm resumption of recent down trend and should target 80 psychological level next.

In the bigger picture, whole down trend from 2007 high of 124.13 is still in progress and there is no sign of reversal yet. Such down trend could still extend further towards 79.75 (1995 low). Though, we'll be cautiously looking for some sign of loss of momentum in case of further decline. On the upside, however, note that break of 94.97 resistance is needed to be the first sign of medium term reversal. Otherwise, outlook will remain bearish.

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