The yen’s two-month rally from its October low is coming under threat after the currency slipped below a key support level, opening the door for it to start weakening again.
(Bloomberg) — The yen’s two-month rally from its October low is coming under threat after the currency slipped below a key support level, opening the door for it to start weakening again.
The currency fell for a fourth day Friday following stronger-than-forecast US ADP employment data, dropping further below a support line starting from October’s three-decade low. It fell as much as 0.9% to 134.59 per dollar, its weakest since Dec. 20.
November’s 3.8% decline in real earnings from a year earlier, the most since May 2014, also weighed on the yen. It extended losses after a Bloomberg report that Bank of Japan officials see little need to rush to make another adjustment to its yield-curve control policy.
Yen bears are now awaiting Friday’s US payrolls numbers, which may confirm a tight labor market is adding to inflationary pressures, backing the Federal Reserve’s pledge that it still has a “ways to go” in raising interest rates.
Stronger-than-expected US employment data may see dollar-yen risk testing its 200-day moving average of 136.48, said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong.
–With assistance from Alice Gledhill.
(Updates pricing, adds real wage decline in third paragraph.)
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