Tokyo Wins 2020 Olympics, Advancing USDJPY Capped by 100, USD Lower on Jobs - 9.9.2013

The most notable currency move early on Monday was by the Japanese Yen, losing sharply against the greenback amid risk-on due to Tokyo winning the bid to host 2020 Summer Olympics as well as on upward revised GDP. Moreover, risk appetite was further supported by China’s surplus widening to $28.5B and its improved inflation data. The USDJPY jumped from floor at 98.62 to 100.08 forming a trading gap and approaching its Friday high at 100.21, then retreated back to 99.47.

Currency pair’s trading gap appears to be a common gap in technical terms since prices already retreated and filled the half of it. We would expect prices to continue lower than support at 99.47, weighed by major resistance area around 100 and as risk of military strike against Syria remains in place.

The US dollar index depreciated to 82.04 on disappointing jobs data on Friday and it is currently trading at 82.14. The employment excluding farming sector increased by 169K in August, it was forecasted to increase by 180K but the most sluggish release was that July NFP were revised from 162K to 104K. Nevertheless, Unemployment rate reduced to 7.3% due to participation rate falling to record lows. Chances are decreasing for Fed to taper its asset purchase program in its September meeting and that reduces demand for the US dollar thus likely to push the US dollar index even lower than 82.

Elsewhere, the Aussie trades in recently established sideway between 0.9214/0.9164 against the US dollar. During the weekend Australian parliamentary elections put in power Conservatives leader Tony Abbott, as a new Prime Minister. The US dollar against the Canadian shifted into a falling trend after US sluggish job data while Canada’s employment increase was almost three times more than projected. The USDCAD reached its first target on Friday at 1.0380. Downside bias though appears strong and is likely to lead it towards 1.0334 in the intraday.