The US dollar has been making headlines this week as the jobs market saw an outstanding increase of 517,000 jobs in January, far surpassing the average analyst estimate of 187,000. The robust growth in the economy is continuing to drive the USD upward, and investors are keeping a close eye on Federal Reserve speakers, including Chairman Jerome Powell, as they digest the recent data.
US Jobs Market Brings Focus Back to Fed Pivot
Despite the Fed raising interest rates by just 25 basis points, the recent job numbers have reignited the debate about a possible more hawkish stance from the central bank. Chair Powell has noted that the Fed still needs substantial evidence to be confident in a sustained downward path for inflation. However, with the labour market remaining tight, the Fed is likely to maintain a hawkish approach in its guidance.
Light US Data Week with Consumer Price Index Revisions in Focus
This week is expected to be light in terms of US data releases, but Federal Reserve speakers will be in full force, including Chairman Powell. The highlight of the week may be the Consumer Price Index revisions, with January data being released on February 14th. It’s important to note that with the release of the January CPI, seasonal adjustment factors are recalculated and may result in revisions to the seasonally adjusted indexes for the previous 5 years.
Final Stages of Nominations for BoJ Governor
Reports suggest that the government of Japan is in the final stages of its nominations for replacing outgoing BoJ Governor Kuroda. BOJ Deputy Governor Amamiya and former Deputy Governor Nakaso are both said to be frontrunners for the position. Analysts predict that the next governor will have no choice but to begin removing accommodation this year.
USD/JPY Technical Analysis
USD/JPY continues to move towards the gap, with the bias remaining on the upside as the 132.80 level is eyed. Despite being on the backside of the prior bearish trend, the bullish momentum remains strong.
In conclusion, the USD/JPY has seen some corrections in the wake of strong job market results in the United States. The robust job growth in January has sparked a debate about a potential shift in the Federal Reserve’s stance towards a more hawkish one, despite the recent interest rate hike being the smallest one since it began tightening to curb inflation. This week is expected to be light in terms of US data releases, but Federal Reserve speakers, including Chairman Jerome Powell, will be making appearances. On the domestic front, Japan is reportedly in the final stages of nominations for the next Governor of the Bank of Japan, as outgoing Governor Haruhiko Kuroda’s term comes to an end on April 8th. Meanwhile, USD/JPY is moving towards the opening gap rally but remains on the backside of a prior bearish trend, thus providing a bias towards the upside.