USD/JPY Rebounds to 149.50 on Stellar US Jobs Report

The USD/JPY currency pair has made a remarkable recovery, ascending to 149.50 after experiencing a dip. This bullish movement was driven by a US jobs report that exceeded market expectations. Despite a slight retracement to around 149.20, the pair remains strong, particularly in the context of US 10-year Treasury note yields standing firm at 4.780%. Japanese officials have expressed concerns over the volatility of the Yen (JPY), while the rise in the 10-year Japanese Government Bond (JGB) coupon suggests potential intervention by the Bank of Japan (BoJ).

US Jobs Data Spurs USD/JPY Rebound:

During the North American trading session, the USD/JPY made a notable climb, primarily propelled by robust US jobs data. This upward movement followed a brief dip that saw the pair hit lows of 148.26 over the previous two days. As buyers stepped in, the 149.00 mark was reclaimed, and the pair reached a three-day high of 149.50, all of which was bolstered by the significant rise in US bond yields.

Strong US Jobs Market Data:

The latest employment data from the US Bureau of Labor Statistics (BLS) exceeded expectations, revealing the creation of over 336,000 jobs in the economy. This figure far surpassed estimates, which had anticipated 170,000 jobs, and it was even 100,000 more than the upwardly revised August data of 227,000. The report underscores the strength of the US labor market, although it should be noted that seasonality adjustments may influence these figures.

Wage Growth and Unemployment:

In addition to job creation, the report provided insights into wage growth and the unemployment rate. Average Hourly Earnings rose by 4.2%, slightly below the consensus and August’s 4.3%. The Unemployment Rate remained unchanged at 3.8%, which was slightly higher than the consensus of 3.7%. While wage growth may have softened marginally, the overall labor market picture remained robust.

USD/JPY Pauses at 149.20:

After reaching a high of 149.53, the USD/JPY experienced a modest retracement, settling around 149.20. This movement was in conjunction with the US 10-year benchmark note, which retreated from its 2007 highs of 4.887% but remained six basis points higher at 4.780%. The sustained strength of US bond yields continued to provide support for the USD/JPY pair.

Japanese Concerns Over Yen Volatility:

Japanese authorities have voiced concerns over the volatility of the Japanese Yen (JPY) in the foreign exchange (FX) markets. Masato Kanda, a representative of Japanese authorities, highlighted their stance, stating that excessive currency movements, whether within a single day or over a week, are considered “excess volatility.” Even one-sided moves accumulating into significant shifts over a specific period are regarded as such.

Potential BoJ Intervention:

Despite the absence of an official statement regarding the recent 200-plus pip drop in the USD/JPY from around 150.00, the exchange rate has remained below that level. Notably, the 10-year Japanese Government Bond (JGB) coupon has risen to 0.80%. This increase opens the possibility of intervention by the Bank of Japan (BoJ) to curb the recent uptick in yields, a move that could stabilize the market.

Conclusion:

The USD/JPY’s rebound to 149.50, driven by stellar US jobs data, underscores the resilience of the pair in the face of Yen (JPY) volatility and the rise in US bond yields. Japanese authorities remain watchful of FX market movements, and the potential for Bank of Japan (BoJ) intervention adds an element of caution to the market’s dynamics. The strong labor market data has provided renewed support for the USD/JPY, which remains an interesting pair to watch amid evolving economic conditions.