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The USDJPY momentarily breached the psychologically significant 150-yen threshold
following an unexpected surge in US job numbers earlier in the day.
“The USD/JPY exchange rate experienced a highly volatile trading session today”
Following an unexpected surge in US job numbers earlier in the day, the USD/JPY momentarily breached the psychologically significant 150-yen threshold.
However, it swiftly reversed course, witnessing a rapid and substantial sell-off that brought it down to the mid-147 yen range within a remarkably short time frame. This marked one of the most significant price fluctuations since the Bank of Japan’s recent Yield Curve Control (YCC) adjustment, sparking heightened speculation in the market about potential intervention by the Ministry of Finance. Nevertheless, officials from the Ministry of Finance have chosen to remain silent on the matter.
The release of August’s US job numbers, standing at 9.61 million, significantly surpassed expectations (which were at 8.83 million). Given the recent softening of the labor market since the spring, some degree of rebound was anticipated from the previous figures. However, the extent of this rebound caught many off guard. It is worth noting that there was a notable surge in job openings in professional and business services. Nevertheless, economists argue that the Federal Reserve (FRB) does not base its policy decisions solely on a single employment indicator, and as such, this data is unlikely to present a substantial risk to the prospects of further rate hikes. Nevertheless, short-term financial markets have now raised the likelihood of a rate hike at the November FOMC meeting to approximately 35%, up from the previous day’s estimate of around 27%.
The Euro to Dollar (EUR/USD) pair briefly dipped into the mid-1.04 dollar range, with a clear bottom remaining elusive in the current outlook. However, the consensus among most analysts is that some dollar retracement is expected by year-end, potentially leading to a rebound in the EUR/USD pair.
Nevertheless, there are voices of skepticism. Concerns over economic stagnation within the Eurozone and uncertainties surrounding Italy’s fiscal outlook have cast a shadow over Euro enthusiasm, with some suggesting that the EUR/USD pair could decline to 1.02 dollars within the next three months. Furthermore, the potential for further increases in energy prices could exert additional downward pressure, possibly even pushing it to parity at 1.00 dollar.
The GBP/USD pair has remained volatile within the mid-1.20 dollar range. Although no definitive sign of a bottom has emerged, sentiment toward a further decline has intensified. As the pair approaches the 1.20 dollar mark, sporadic instances of short covering have been observed.
Nevertheless, there is a looming apprehension of further downside in the GBP/USD pair, with expectations of it breaking below the 1.20-dollar threshold. The prevailing momentum favoring dollar buying is anticipated to persist, posing a significant risk of breaching the 1.20 level and potentially targeting the year-to-date low of 1.1820 dollars.
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