US dollar sharply gained ground and preserved its advance against the Japanese yen during the late phase of US session on Friday, after reports showed an outstanding data regarding non-farm payrolls and consumer confidence in the United States.
USD/JPY rose to a session high at 102.96 at 19:25 GMT, after which the pair closed at 102.85 on Friday, advancing 1.03% on a daily basis. Support was likely to be received at December 5th low, 101.62, while resistance was to be encountered at December 2nd high, 103.13.
On Friday it became clear that employers in the United States continued hiring new employees at a steady pace, which led to a significant drop in nations rate of unemployment in November. This suggested a strong pace of economic growth during the final quarter of the year and also added to the case that the Federal Reserve Bank may be closer to trimming the monthly pace of its monetary stimulus. US economy managed to add 203 000 new jobs in November, after the number of added jobs in October has been revised down to 200 000 from 204 000 previously. Experts had projected that private sector in the country will add 183 000 job positions in November. Non-farm payrolls in September and October have been revised up by 8 000.
At the same time, the rate of unemployment in the United States fell to 7.0% in November, marking its lowest level in five years, after in October the rate stood at 7.3%. Preliminary estimates pointed a decrease to 7.2% in November.
These data points may bolster speculation that the Federal Reserve will soon pare back its asset purchases, which tend to debase the national currency, from the current monthly pace of 85 billion USD. Fed policymakers are scheduled to hold a meeting on policy on December 17th-18th. Some experts suppose that the central bank will only prepare global markets for its move with stimulus in December, while the move itself may occur in the beginning of the next year.
Recovering labor market in the United States led to improving sentiment among consumers and increased spending, despite a 0.1% decline in personal income. Personal spending, which accounts for almost 70% of nations economic growth, rose 0.3% in October, outstripping both projections and last month’s increase of 0.2%.
US average hourly earnings increased to 0.2% in November compared to the previous month to reach $24.15, a 2% yearly increase. Average weekly hours for all workers also increased, from 34.4 in October to 34.5 in November. Personal savings contracted to 4.8% in October from 5.2% in September, while inflationary pressure in the country still remained suppressed.
Core personal consumption expenditures (PCE), which exclude volatile components such as expenditures on food and energy, came in consonance with projections both on a monthly and annual basis, climbing 0.1% and 1.1% in October, respectively.
Also on Friday, a survey on consumer sentiment in the United States, conducted by Thomson Reuters and the University of Michigan, showed that confidence rose to its highest level since July in December, with the preliminary value of the corresponding index reaching 82.5 this month. The final value of the index came in at 75.1 in late November, while experts had expected a modest increase in December to a reading of 76.0.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda said on Monday in the city of Nagoya that the central bank will continue with its loose monetary policy until the 2% inflation rate becomes stable and will monitor the impact of the yen’s correction on small companies.
Elsewhere, EUR/JPY cross closed on Friday at 140.95, advancing 1.32% on a daily basis, after hitting a session high at 141.05, a new multi-month high.