There's no doubt that today's labor market data from the United States will set the tone for the upcoming weeks as investors will search for clues ahead of the FOMC meeting.
Investors are awaiting the U.S. non-farm payrolls report for August that may play a crucial role in the Federal Reserve's decision about when to lift interest rates. The market expects 217K change in the NFP in August. However, there's a great possibility that this will bring a surprise to the downside. If so, it won't mean that the labor market in the U.S. has deteriorated. Some of the major banks expect that the negative surprise caused by the seasonal adjustment will appear once again.
Japan’s regular wages increased in July by the most in nearly ten years, aiding Prime Minister Shinzo Abe’s efforts to reflate the world’s third-biggest economy. Base pay climbed 0.6 percent from a year earlier, the biggest increase since November 2005. Overall wages adjusted for inflation rose 0.3 percent, the first rise in more than two years, after a steep decline in the previous month. Raising wages may spur consumption in Japan and lead to a higher rate of inflation. If so, the BoJ may remain on hold .
As far as Japan is concerned, the yen is currently the strongest currency on the FX market. The Japanese yen enjoyed solid gains versus the US dollar as the risk-off market profile has become the new normal in recent times. Traders continue to bolster their confidence in the safe-haven asset – yen amid falling equities and persisting broad based sell-off. USD/JPY drops more than 100 pips and now hovers slightly below 119 handle. Our technical analysis of the pair can be found .
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