NFP: Strong data stretches USD/JPY too far to the downside - TDS
06.11.2020, 15:53

NFP: Strong data stretches USD/JPY too far to the downside - TDS

FXStreet notes that Nonfarm Payrolls (NFP) in the US rose by 638,000 in October beating market expectations. The solid report has not really resonated with FX markets much. The exception is USD/JPY as it is the only pair in the G10 that has broken through a key threshold of 104 (which others have respected their range extremes thus far), economists at TD Securities report.

“Payrolls were +638K in October, above the +580K consensus; we had forecast +300K.”

“Much of the strength in recent months has likely been due to CARES Act spending, which is now fading. The ongoing surge in COVID cases also cautions against extrapolating from the strength in today's data.”

“USD/JPY could be a bit more sensitive and potentially, a leader in USD direction. Though we like this pair lower over the medium-term, we think it may have stretched tactically too far. 103.00/20 is a pivot we are watching for key support. 103.80/00 should be key resistance.”

“We are also mindful of USD/CAD which has budged little despite its own jobs beat. We think a lot of good news is in the price and view 1.30 as a key line in the sand.”

“More broadly, as election uncertainty dissipates, we think more focus will be given to rising COVID-19 infections, slowing mobility data and economic growth. With the prospect for large-scale fiscal stimulus unlikely and anytime soon, that could sour risk sentiment and some of the risk-sensitive currencies like CAD.”

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