- US economy adds 315,000 jobs in August, unemployment rate rises to 3.7%.
- USD/JPY pulls back on dollar weakness after NFPs.
- The yen remains under pressure, now due to risk appetite.
The USD/JPY it is falling modestly on Friday, having previously reached 140.79, the highest level since 1998. The weakness of the dollar in general weighed on the pair after the official US employment report.
US yields fall sharply
Nonfarm payrolls increased by 315,000 in August, versus expectations for a 300,000 increase. The unemployment rate unexpectedly rose from 3.5% to 3.7%, however, the labor participation rate also increased.
Following the report, US yields fell sharply favoring USD/JPY’s decline. The US 10-year yield fell to 3.17% and the 2-year Treasury yield fell from 3.52% to 3.40%. At the same time, stock prices on Wall Street rose. The Dow Jones rose 0.81% and the Nasdaq 0.79%. The Japanese yen failed to rally broadly on the back of improving risk sentiment.
Despite Friday’s decline, USD/JPY is about to post the third consecutive weekly rise and the highest close since 1998. The divergence between the monetary policy of the Bank of Japan and that of the Federal Reserve continues to drive the pair upward. At its next meeting, the Bank of Japan is expected to maintain its ultra-loose stance, while the Fed is seen raising rates by 50 or 75 basis points.
Technical levels
Source: Fx Street
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