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Asian Session – Yen strengthens ahead of US employment report despite ‘risk-on’ mood

Posted on February 6, 2015 by the XM Investment Research Desk at 7:53 am GMT

japan-yen_1931929bThe yen was stronger during today’s Asian trading, as it looked more attractive given some of the woes that are affecting the US dollar and the euro.  Dollar yen was trading around 117.25 from around 117.50 the previous day, while euro / yen also continued lower after a peak at 135.15 during the US session.  Euro / yen was last trading at 134.28.

 

The yen’s gains came despite yet another very strong performance on Wall Street the previous day and a generally optimistic mood in Asian stock markets.

 

Euro / dollar also gave up some of its gains but held relatively firm at 1.1452 (1.1498 was the previous day’s high – just short of the 1.15 level).  The meeting between the German and Greek finance ministers ended in a tense manner the previous day, although the news that the European Central Bank approved emergency funding in the order of 60 billion euros in favor of Greek banks, helped calm nerves.  This followed the news on Wednesday night that Greek bonds were no longer eligible collateral for regular funding by the ECB.  Disappointing data on German industrial production for December was weaker-than-expected, which weighed a little on the euro.

 

Regarding the Australian dollar, the currency gained against the US dollar to trade at 0.7830.  This was despite news that the country’s premier was going to face a leadership challenge next week because of a revolt within his party.  The aussie also firmed as the RBA’s monetary policy statement contained the contradicting signals of a slight downgrade of the economic outlook combined with cautiousness with respect to the buoyant housing market.

 

Looking ahead, the US employment report will be the highlight of the day.  Economists are expecting that 230-240 thousand jobs were created in January and that the unemployment rate held at 5.6%.  There will also be a lot of focus on average weekly earnings, expected to increase 0.3% month-on-month after a disappointing drop in December.  The US dollar has been under some pressure lately but a strong employment report could revive its fortunes.

 



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