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Forex pairs in this Article » USD/JPY

The USD/JPY pair went wild during the session on Thursday as a reaction to the European Central Bank cutting rates as a complete surprise to the markets. In this highly risk sensitive currency pair, we saw a massive swing in one direction, followed by a massive swing in the other. After all, the US dollar gained against the Euro, and that had a ripple effect through the entire currency markets as the Dol lar gained against the Yen. However, by the end of the day several traders would have been worried about the global growth scenario, and that of course had them running to the relatively safe arms of the Japanese yen.

You have to remember that much of the world global finance is actually funded by Japanese banks. That's what the low interest rate does for large hedge funds: gives them the opportunity to borrow at almost nothing, and then gets interest rate differential in places like New Zealand, Australia, and even more exotic places like Jamaica. When you are guaranteed a 7% return that gets very interesting when you're talking millions upon millions of dollars.

Nonfarm payroll numbers will write this market yet again.

I believe the nonfarm payroll numbers will write this market yet again, which they typically do anyway. This is a particularly sensitive time for the market so as we try to figure out whether the world global growth is slowing, or if it simply going to be the United States by itself again. My suspicion is that the jobs numbers will be very good later today, and we will have a scenario where the Federal Reserve, much like other central banks around the world, will not be able to do anything as far as tightening of monetary policy anytime soon.

Going forward, I expect this pair to eventually go higher, but it will be a while before we gain any serious traction. Unfortunately, I think we’re going to see more continued choppiness in this market which will simply be a great way to drain your trading account. Having said that, if any significant fall from this point though begs buying on signs of support.

USDJPY Daily 11813

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