In Monday morning trade, the Japanese Yen held close to its recently struck troughs versus both the Euro and the U.S. Dollar which followed last Friday’s Wall Street rally. The rally came shortly after the release of unexpectedly disappointing labor data which had given rise to some speculation that the Federal Reserve Bank might reconsider or even take a brief pause on plans to taper Quantitative Easing. According to the U.S. Labor Department, private sector hiring in January rose by only 113,000 new jobs, well off the consensus call of 185,000. The unemployment rate, however, fell to 6.6%, a 5-year low, and though the labor data was mixed it suggests to some strategists that the U.S. economy is still improving thus QE unwinding is likely still in the works and the reason why FX players did not turn to the safe haven Yen.
As reported at 11:52 a.m. (JST) in Tokyo, the USD/JPY pair traded at 102.65 Yen, while the EUR/JPY stood at 139.79 Yen. The EUR/USD remained close to last Friday’s 1-month peak and traded at $1.3623. Though the European Central Bank took no decisive action at Thursday’s policy meeting, Mario Draghi hinted that the upcoming inflation report would likely hold all the cards and that if action was to be taken, that report would be the trigger.
Janet Yellen in the Hot Seat
A look ahead will give FX players a glimpse at how well the new Federal Reserve chief Janet Yellen will handle herself when the pressure mounts as she prepares to testify before the U.S. Congress. Eurozone growth data is also due to be released this week and could offer some clues as to what action the ECB might intend to take.