- Job growth in the United States increased by 339,000 jobs in May.
- Unemployment rate: 3.7%.
- Wage inflation decreased slightly.
He USD/JPY It gained more than 60 points on Friday, rallying to the 139.70 zone after US labor market data suggested the Federal Reserve (Fed) may reconsider a further hike. In reaction, the US dollar gained traction on rising US bond yields, while Japanese yields continue to decline.
Post-NFP Yield Divergence Favors Dollar
US Bureau of Labor Statistics release that US employment as measured by Nonfarm Payrolls (NFP) increased by 339,000, well above the consensus of 190,000. The Office stated that employment gains were seen in several sectors, with notable increases in professional and business services and public employment. Other figures show that the unemployment rate rebounded to 3.7% in the same period, versus 3.5% forecast, while wage inflation, as measured by average hourly earnings, stood at 4.3% year-on-year, versus 4.4%. provided.
In this sense, although there have been signs of a slowdown in the demand for labor, strong employment growth and persistent inflation are putting pressure on the Fed to consider further rate hikes, which has fueled an increase in yields of bonds. US bonds. US bond yields rose on the back of strong job growth and persistent inflation, putting pressure on the Federal Reserve to consider raising interest rates. The US 10-year bond yield rose 1% to 3.67%. In addition, the US 2-year yield rose 1.98% to 4.47%, while the 5-year yield rose 1.29% to 3.79% and the US rate hike. seems to be attracting foreign investors and therefore supporting the US dollar.
However, CME’s FedWatch tool suggests that markets continue to price in higher odds of the Fed not raising rates at the June 13-14 meeting, while the odds of a 25 basis point (bp) hike increased slightly. up to 30%.
Instead, Japanese bond yields fell. The 10-year yield fell 1.68% to 0.41%, while the 2-year yield fell 9.7% to -0.07%. In addition, the 5-year yield in Japan experienced a decline of 8.78% to 0.07% and put more pressure on the yen.
Levels to watch
According to the daily chart, the USD/JPY pair remains bullish in the short term as the RSI and MACD suggest that buyers are in control while the pair trades. above its main moving averages. The 4 hour chart also suggests bullish dominance as the aforementioned indicators jumped from negative territory to positive zone.
The 140.00 level is key for USD/JPY to gain more traction. If broken above, we could see a more pronounced move towards the 140.50 area and the 141.00 key psychological level. On the other hand, immediate support for USD/JPY is seen at the 138.90 area, followed by the 138.50 level and the 138.00 psychological level.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
