USD/JPY traded with a mild downside bias on Friday, despite a stronger-than-expected US Nonfarm Payrolls (NFP) report, as persistent intervention risks from Japanese authorities supported the Japanese Yen (JPY) and capped gains for the US Dollar (USD) against the yen [1]. At the time of writing, USD/JPY was around 159.57, easing modestly after briefly spiking to 159.82 following the release of US labor data [1].
The US Bureau of Labor Statistics reported that the US economy added 178,000 jobs in March, significantly beating expectations of 60,000, while the unemployment rate edged lower to 4.3% from 4.4% [1]. February’s jobs figure was revised downward to show a loss of 133,000 jobs, compared to the previously reported decline of 92,000, highlighting recent volatility in the labor market [1]. Average Hourly Earnings rose by 0.2% month-over-month in March, below the 0.3% forecast and down from 0.4% previously. On an annual basis, Average Hourly Earnings increased by 3.5%, missing expectations of 3.7% and slowing from 3.8% [1].
The strong headline jobs print reinforced expectations that the Federal Reserve will keep rates unchanged for longer, with markets largely pricing out rate cuts amid oil-driven inflation risks related to the ongoing US-Israel war with Iran [1]. However, business activity data was softer, as the S&P Global Composite PMI eased to 50.3 in March from 51.9 in February, marking its weakest level since September 2023. The Services PMI fell to 49.8, below the flash estimate of 51.1, signaling contraction and the lowest reading in over three years [1].
Despite the soft PMI data, the US Dollar Index (DXY) traded around 100.15, extending gains for the second straight day [1]. Nevertheless, USD/JPY struggled to draw support, as traders remained cautious near the 160 level due to repeated signals from Japanese authorities about their readiness to intervene against excessive volatility, keeping gains capped despite underlying US Dollar strength [1].
CONCLUSION
The USD/JPY pair weakened slightly despite robust US jobs data, as intervention risks from Japanese authorities overshadowed dollar strength. While the US labor market surprised to the upside, softer business activity and cautious trading near key levels limited further gains. Market participants remain alert to potential intervention, keeping volatility in check.