- The US dollar bounced from the crucial 156-yen level during trading on Thursday as we continue to see a lot of noise in the US dollar against the Japanese yen.
Recently we've seen the Bank of Japan come out and intervene, although they don't openly admit it, and as a result there has been some weakness.
Furthermore, we had interest rates drop in the United States and that brought in some weakness as well as the interest rate differential shrank a bit.
That being said, there are rumblings coming out of Iran and out of Washington DC that they are still not necessarily agreeing on the facts or reality. While there were hopes of peace breaking out, and there still could be in theory, the Iranians and the Americans seem to not agree on whether or not uranium is coming out of that country. That is a huge deal and ostensibly is the whole reason the Americans had attacked Iran.
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As long as we continue to see these games being played through the media and Twitter and social media, it is going to be a very noisy world to trade in. That being said, you do get paid to hold the US dollar against the Japanese yen and I think that is going to be the main driver here.
Friday has the non-farm payroll announcement coming out and that is a market that really can move this pair. If the number coming out of the United States is hotter than anticipated, that could cause a bit of trouble for the Japanese yen because it will push the idea that the Federal Reserve will have to stay tighter for longer. In other words, the interest rate differential will remain quite large.
The expected number of jobs added in the previous month is 65,000 and if we blow the doors off of that like we did last month, I would anticipate that we probably see a bit of a jump in this pair. Ultimately, this is a market that I think will try to make its way back to the 158 yen level, it's just going to be a grind more than anything else.
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