With the Release of U.S. Jobs Data, Dollar Reaches Near 2-week High vs. Yen

The U.S. economy’s positive outlook, owing to the reduced unemployment rates in the country, attracted the investors and consequently, the dollar reached close to its two-week high, that the currency had achieved last week. The release of the U.S. Jobs Data helped the currency to record a steady growth against the yen on Monday. The data revealed a surprise drop in the country’s unemployment rates and which caused the investors to take more interests in the currency.

On last Friday, the dollar was at its two-week high at 78.88 yen. This was the US dollar’s strongest level versus yen since Sept. 19. However, on Monday after shifting a little southward, it reached at 78.68 yen which is not a very shocking drop for the currency from its two-week high position last week.

Market sources are attributing currency’s this strong move to the jobs data released by the U.S. Labor Department. According to the Labor Department, more than 114,000 jobs were created by the employers in the country in the last month. This revealed that the country’s unemployment rate dropped significantly reaching to a level of 7.8 percent. This unemployment rate in the USA is the lowest since January 2009. This revelation signaled a healthy recovery sign of the US economy and worked significantly to draw attention of the worldwide investors towards the currency.

The jobs data prompted investors to take interests in risky assets, and the U.S. Treasury yields boosted the dollar versus the yen. However, the market experts feel that the gains in the US dollar against the yen will not be substantial and the growth will remain limited in the near future. Experts feel that it will be difficult for the currency to go beyond 79 yen. There are so many Japanese exporters and sellers who are supposed to be around that level and thus the dollar could hardly move forward beyond that level in the near term.

Many market analysts believe that the Friday’s US jobs data is not significant enough to convince the market participants about the positive outlook of the U.S. economy. For many investors, it could be hard to believe that the jobs market in the USA is heading towards a strong recovery.

On the other hand, the Bank of Japan published a quarterly business sentiment survey last week and according to which the average dollar/yen exchange rate is considered to be is 78.97 yen, which major Japanese manufacturers are keeping in concern for their next six months’ business plans. This shows that for the Japanese exporters, the dollar’s value of 78.97 yen may serve as a threshold limit and if the dollar rises above this value, the Japanese exporters may prefer to sell their dollars. This clarifies why the dollar may not gain considerably, still due to its strengthening jobs market.

The daily chart also reveals that the technical resistance against the dollar could be anywhere near 79.27 yen, and this technical analysis points out how much gain the dollar can achieve without much resistance in the near future.

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