Yen Selloff Continues, Focus Turns To NFP

The Yen's post BoJ weakness remains the general theme today, as USD/JPY jumps to 3 1/2 year high of 97.19 and took out 96.70 resistance to resume recent up trend. The AUD/JPY also jumped sharply, and broke 100 psychological level to resume the larger up trend. Solid strength is also seen in the EUR/JPY and GBP/JPY; ;they should take on recent resistance at 127.70 and 147.97 soon. Investor Soros warned that if Japaneses realize that yen's decline is liable to continue, they willl want to put the money abroad and the fall may "become like an avalanche". Meanwhile, Bill Gross said that more depreciation of the yen is needed "in order to get even close to 2% inflation". A key factor to watch is whether the non-farm payroll report would trigger steeper USD/JPY rally which should then set other yen crosses higher.

While the euro initially dipped against the dollar after the ECB left rates unchanged at 0.5% yesterday, it staged a quick, strong come back and is trading back above 1.29 level. It's believed a key factor in driving the euro higher was Draghi's strong emphasis on keeping it. He said that some people have "vastly underestimated what the euro means to the Europeans" and "vastly underestimated the amount of political capital that has been invested in the euro." He stressed that there is "no plan B". Another factor was ECB executive board member Coeure's comment that shared eurozone debt is a good objective.

Looking ahead, employment data from US will be the main focus. Economists are expecting 190k growth in non-farm payroll in March with unemployment rate unchanged at 7.7%. The ADP employment report released on Wednesday missed expectation and showed 158k growth only. While the ISM manufacturing index missed expectations, the employment component jumped sharply to 54.2 in March, its highest level since last June. However, the employment component of ISM services dropped sharply to 53.3, down from 57.2 in February and hit the loweset level since November. We'd tend to go long USD/JPY if the NFP beats expectations and avoid dollars should it miss.

On the other hand, Canadian job data will also be a major focus. it's expected to rise 9k in March while unemployment rate is expected to be unchanged at 7.0%. Other data for Friday includes eurozone retail sales, Swiss forex reservces, German factory orders, Canada and US trade balance and Canada Ivey PMI.