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USD/JPY – Headed for Summer Lows?
Ever since the start of the year USD/JPY has felt the brunt of the risk aversion selling breaking one support after another. The culprit for this move has been the collapse of the Chinese stock market which created massive liquidation moves all across the world unwinding many of the risky trades financed in yen.
The gloomy global outlook has also had a very negative impact on US rate taking them down by more than 10bp since the start of the year and weighing on the pair.
However, tomorrow’s Non Farm payroll report may save the day for dollar bulls if it can print above the 250K mark sparking confidence in the fact that Fed may continues to tighten in 2016. Despite the lackluster macro data, the labor reports have been remarkably robust led by ADP data and Challenger layoff figures. If the NFPs print to the upside they may push USD/JPY back above the 119.00 figure, but if they miss the pair could head towards the summertime lows of 116.00