The headline Non-Farm Payroll data released today showed that 192K jobs were added to the US economy in March, which missed forecast of about 199K. This was slightly disappointing, but the February reading was revised up dramatically from 175K to 197K. The unemployment rate remained at 6.7%.
The total number of private sector jobs has returned above the 2008 peak after which we had the global financial crisis:
March 2014: 116,087,000 jobs.
January 2008: 115,977,000 jobs.
Here’s the official report: US March NFP
The forex markets showed whippy movements, but the S&P500 is showing risk-on flow as it extends to another historic high.
The SPX is now pushing at the 1900 level. Today’s NFP is decent enough allow the prevailing risk-on momentum to remain in control.
At this point, if there is a bearish correction, look for support around the previous consolidation highs. We also saw support reaction near the 1883.5 pivot. Below that there is the 1870-1875 resistance area that could turn into support.
USD/JPY should rally if the S&P500 can remain bullish. The two are positively correlated and the 1H charts show the the corresponding consolidation and rally in both the index and the USD/JPY pair before the NFP.
However, USD/JPY was whippy and showed possible exhaustion. It has been bullish, but has stalled at 104, and the reaction so far to the NFP looks like one of a market struggling to extend its prevailing rally – exhaustion?
The 1H chart shows the reaction candle which expanded the range above and below the range since 4/2 (Wednesday).
When the dust settles we should have a better sense of direction. If the market holds above 104 and extends above 104.15, we should expect a bullish market. Below 103.50 however, the USD/JPY would look like it ran out of steam, and we can look at the previous resistance at 102.68 as a possible support.
Also when the dust settles, look for the USD/JPY and S&P500 to come back to positive correlation.
Fan Yang, CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes.