Research and analisis

USD/JPY extends advance to 2-week high at 102.25

The USD/JPY extended its post-NFP gains from 101.80 area and now it is testing the 102.25 level where the pair found some selling interest.

The USD/JPY extended its post-NFP gains from 101.80 area and now it is testing the 102.25 level where the pair found some selling interest.

Currently, USD/JPY is trading at 102.19, up 0.43% on the day, having posted a daily high at 102.30 and low at 101.75. The hourly OB/OS Index is showing overbought conditions, alongside the Trend Index which is slightly bullish.

USD/JPY Sentiment

"US 10 year notes are now at a 2.657% yield, up a bit less than 3 bp on the day. Earlier they rose to 2.69%. "USD/JPY may struggle to maintain its altitude if yields ease further. We trade now at 102.15 after reaching 102.26 highs earlier this morning."

If the pair manages to break above 102.25, it would face resistance at 102.40 and 102.60. On the downside, supports are at 102.00, 101.75 and 101.60.

Gold hits 1-week low after NFP

The yellow metal dropped to a 1-week low as another solid nonfarm payrolls reading sent the dollar up across the board.

The yellow metal dropped to a 1-week low as another solid nonfarm payrolls reading sent the dollar up across the board.

Gold for August delivery came under pressure and fell to a low of $1309 an ounce after data showed the US economy added 288,000 new jobs in June versus 213,000 expected. Meanwhile the May gain was revised to 224,000 from 217,000 and the unemployment rate fell to a nearly six-year low of 6.1%. Separated data, showed the US trade deficit shrank more than expected in May.

However, the metal managed to bounce from lows and it is currently trading at $1320 an ounce, 0.75% below its opening price.

ECB decision fairly uneventful - TD Securities

Jacqui Douglas, Senior Global Strategist at TD Securities, remarks that ECB's monetary policy decision was devoid of fireworks today , with nothing there to change the view on policy over the coming months and quarters.

Jacqui Douglas, Senior Global Strategist at TD Securities, remarks that ECB's monetary policy decision was devoid of fireworks today , with nothing there to change the view on policy over the coming months and quarters.

Key quotes

"Rates were unchanged, the forward-looking language was unchanged, but Draghi did announce that as of 2015, ECB meetings will be switching from monthly to every 6 weeks, and that the ECB has finally agreed to begin publishing minutes from its policy meetings as of January 2015."

"The bigger market reaction today by far was driven by another strong nonfarm payrolls report, pushing the USD and rates higher across the board as Draghi’s press conference got underway."

"However, the EUR did still manage to drift lower through the press conference despite any obvious catalysts, as FX markets seemed to follow “the trend is your friend” mantra."

"The EUR saw another small push lower when Draghi discussed how the EUR is a more obvious driver of inflation trends right now than it has been in the past, so it will be looked at 'with great attention.' The ECB meeting has come to a close with EURUSD continuing to trade around its lows of the day, just above 1.36."

"The ECB is in cruise control for now, as it waits for the additional accommodation from the June rate cuts and from the upcoming TLTROs to feed through into stronger growth and higher inflation, and as it sorts out the details of a potential support program for ABS markets."

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