With the market moving into bear territory, even with a strong NFP data, the market might dismiss it as it doesn’t the true impact of COVID-19. Short USD/JPY?

  • The dollar has fallen to its lowest level against the yen since August 2019.
  • All signs are pointing towards a stronger NFP tonight with ADP Non-Farm employment coming in stronger at 183k, higher than the forecast of 170k.
  • Furthermore, ISM Non-Manufacturing PMI came in stronger at 57.3 versus the forecast of 54.9.
  • However, a stronger NFP tonight could be dismissed as it’s not reflecting the true impact of COVID-19 since the situation in the US has only escalated recently.
  • On the other hand, if NFP shows weakness, it will continue the current sell down in USD/JPY.
  • USD/JPY could weaken further towards 104.50 if NFP turns out to be worse than expected.
  • Although if NFP does surprise the market, it could rally slightly back to 106.50 before inviting short sellers back.

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Fullerton Markets Research Team

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