The US August employment report beat market expectations, triggering dollar buying. While USD/JPY briefly moved into the ¥156 range, caution over correcting yen weakness remains. Gaitame.com provides the following outlook for today.
In Friday’s US employment data on the 4th, nonfarm payrolls rose by 162,000, well above market expectations. The previous month’s figure was also revised upward, bringing the average increase over the past 3 months to 71,000. The unemployment rate was unchanged at 4.1%, the labor force participation rate was 61.6%, and average hourly earnings rose 0.3% month on month and 3.1% year on year, in line with expectations.
Reports emerged that, in remarks by the US president, Trump had suggested that the United States could suspend trade with countries running trade surpluses with the US unless interest rates were lowered. A period of renewed expectations for rate hikes was also noted. Some market participants believe this could affect the outlook for the dollar.
Today’s forecast range for USD/JPY is broadly ¥155.6 to ¥156.8. Although the pair reached the lower ¥156 range at one point on a closing-price basis, caution over correcting yen weakness remained, and it was also seen falling back to around ¥155.34. Attention will now focus on indicators including the PPI on the 10th and CPI on the 11th.
Market participants say that while expectations for rate hikes by the Federal Reserve are strengthening, caution over correcting yen weakness remains deeply rooted. Attention is also expected to remain focused on the Bank of Japan’s policy direction and comments from the Ministry of Finance, and the range could shift depending on the indicator results.