ADP jobs report beats expectations; USDJPY falls on rising U.S. interest rates【July 7, 2023】

Fundamental Analysis

• U.S. stock indexes fall back, stock sell-off intensifies against backdrop of sharp rise in U.S. interest rates
• June ADP employment report came in at 495,000, well above market expectations
• Today’s U.S. government jobs report is expected to show 225,000 jobs.
• The dollar temporarily strengthened against the U.S. dollar, with the dollar/yen exchange rate rising to 144.50 yen
• BOJ Deputy Governor mentioned the YCC and commented that he would make a balanced decision.
• Yen buying spreads on the view that the BoJ is considering revising the YCC

USDJPY Technical Analysis

USDJPY surged to 144.50 yen after the ADP employment report was released. The number, which was close to double the market forecast, was released, underscoring that the U.S. labor market is extremely strong despite the continuation of the high interest rate policy. The yield on the 10-year U.S. Treasury note also surged, leading to a sell-off in stocks, with the dollar falling back from its opening price to the 143.80-yen level.

Day Trade Strategy (Hourly)

Today’s event of interest is the U.S. employment report. While ADP is a private sector statistic, today’s will be a government employment report. If the numbers are as strong as the ADP employment report, stock prices may fall further against the backdrop of rising interest rates.

As a day trading policy, we would like to adopt a short-term selling policy. However, since it is the day of the jobs report, intraday volatility could be low. Specifically, we envision a limit sell near 144.15 yen and a buyback near 143.60 yen. The policy is to always close positions before the employment statistics.

Support and Resistance Lines

The resistance line to be considered in the future is as follows

144.15 JPY – 240 moving average
143.68 JPY – Fibonacci 23.6%.

Market Sentiment

USDJPY　Sell: 61% Buy: 39%

Today’s Important Economic Indicators

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.