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The USD/JPY is paring back some of Thursday’s losses, climbing back into the 145.00 handle.
The US Dollar is fighting back after a steep decline sparked by a hawkish BoJ.
US NFP figures beat expectations, keeping the Greenback bid through Friday market action.
The USD/JPY is back on the rebound for Friday after posting an extreme backslide on Thursday, climbing four-tenths of a percent from the day’s opening bids and looking to pare back losses. The US Dollar (USD) traded flat against the Japanese Yen (JPY) through the early half of the trading week before getting knocked back after the Yen caught a broad-market rally on the back of unusually hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda.
Friday sees the Greenback attempting to claw back chart paper, rising back into the 145.00 handle after a brief dip back into 142.50 at the start of the final trading session of the week.
US Nonfarm Payrolls (NFP) broadly beat the street on Friday, posting a net gain of 199K jobs through November versus the forecast 180K, and climbing over October’s net jobs gain of 150K. Broader markets have been ramping up bets of an accelerated path towards rate cuts from the Federal Reserve (Fed), with many market participants expecting the first rate cut from the Fed by as early as next March.
A still-tight US labor market continuing to add more jobs than expected throws a small wrench in the works, bolstered by accelerating Average Hourly Earnings in November, which came in at 0.4% MoM compared to the forecast 0.3%. Worker earnings appear to be gaining in the near term after October printed 0.2% MoM.
Read More: US Nonfarm Payrolls increase by 199,000 in November
Despite the Dollar-positive NFP release, the USD/JPY remains deep in the red for the trading week after the Yen surged in one of its single best trading days in 13 months, fueled by speculation that the BoJ could finally be ending its negative rate regime as the Japanese central bank moves towards tighter monetary policy.
Despite the BoJ fearing a collapse in Japanese inflation sometime in 2025, Japanese Core Consumer Price Index (CPI) inflation continues to run hotter than expected, hitting 2.9% for the year into October and chalking in a nineteenth straight consecutive month of inflation outrunning the BoJ’s 2% upper target band.
BoJ Governor Ueda hinted that the BoJ may begin moving to tighten monetary policy if wage growth begins to accelerate heading into 2024, sparking a broad-market bid splurge that sent the USD/JPY tumbling over 4% peak-to-trough on Thursday. The US Dollar recovered some ground, and continues to see a moderate climb heading into the Friday market close, but still remains well off the week’s high bids.
Next week will be another Fed watch scenario, with the Federal Reserve delivering their last rate call of 2023, followed by an update to the Fed’s ‘dot plot’, or summary of forward-looking inflation expectations. Any kind of decline in Fed inflation forecasts will likely spark a mark risk relief rally, and could send the US Dollar tumbling even further as investors chomp at the bit for Fed rate cuts.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the weakest against the US Dollar.
USD
EUR
GBP
CAD
AUD
JPY
NZD
CHF
USD
1.30%
1.42%
0.84%
1.76%
-1.07%
1.60%
1.50%
EUR
-1.33%
0.13%
-0.46%
0.47%
-2.41%
0.30%
0.19%
GBP
-1.45%
-0.12%
-0.58%
0.35%
-2.52%
0.17%
0.07%
CAD
-0.85%
0.46%
0.59%
0.93%
-1.94%
0.76%
0.64%
AUD
-1.79%
-0.47%
-0.34%
-0.93%
-2.91%
-0.15%
-0.27%
JPY
1.02%
2.36%
2.63%
1.92%
2.82%
2.66%
2.52%
NZD
-1.61%
-0.29%
-0.17%
-0.75%
0.17%
-2.68%
-0.09%
CHF
-1.52%
-0.18%
-0.05%
-0.64%
0.28%
-2.58%
0.11%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The US Dollar is up four-tenths of a percent against the Yen on Friday, and looking for further upside momentum after climbing from Friday’s early low of 142.50. Topside technical resistance from the 50-hour Simple Moving Average sits nearby just beyond the 145.00 handle, with further pressure from the 200-hour SMA descending into 146.75.
Thursday’s dip and Friday’s moderate recovery sees the USD/JPY setting up a technical bounce from the 200-day SMA just above 142.00, and the trick for Greenback bidders will be to push the pair back towards the 147.00 handle, where they can take a fresh run at the 50-day SMA parked just below the 150.00 major price level.
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