Fresh supply of the Japanese Yen is received in response to the depressing domestic data.
On Thursday, the Japanese yen (JPY) falls against the US dollar (USD) for the third straight day. And continues to hover around a two week low throughout the Asian session. Weaker Japanese data, which revealed that manufacturing activity shrank in December. At the fastest rate in ten months against the backdrop of a terrible 7.6-magnitude earthquake on New Year’s Day. Turns out to be a significant influence. eroding the Japanese yen.
Moreover, uncertainty around the Federal Reserve’s (Fed) potential for early rate cuts supports US Treasury bond yields. Which is believed to be positive for the US dollar and the USDJPY pair.
USDJPY pair benefit from an increase in US bond yields.
Investors are pricing in a higher likelihood of a 25 basis point (bps) rate decrease in March, though, since they appear sure that the Fed will abandon its hawkish posture. Thus, the USD and US bond yields should remain contained. Aside from this, a softer risk tone combined with increasing consensus that the Bank of Japan (BoJ) would abandon negative interest rates and Yield Curve Control (YCC) policies in April following the annual salary talks in March should limit losses for secure shelter in JPY. Before making aggressive, optimistic wagers on the USDJPY pair and setting up for future gains, this calls for some prudence.
The US economic docket, which includes the release of the ADP report on employment in the private sector and the customary Initial Jobless Claims data later in the early North American session, is now anticipated by market participants. The Nonfarm Payrolls (NFP) report, which is the widely anticipated US monthly jobs statistics, is scheduled for release on Friday.
Daily Market Movers: The Japanese yen exchange rate is close to a two-week low.
Weaker domestic data causes the Japanese Yen to give up its slight gains from the Asian session. But a number of positive factors should help prevent further losses.
The Japan Manufacturing PMI (au) from Jibun Bank stayed in. Despite a little increase in production and an improvement in factory employment, the US manufacturing sector stalled.
Although it stayed in contraction zone for the fourteenth consecutive month, the US ISM Manufacturing PMI improved to 47.4 last month after remaining stable at 46.7 for the previous two months.
Separately, the Job Openings and Labor Turnover Survey (JOLTS) of the Labor Department revealed that, in November. There were 8.79 million job advertisements, the lowest number since March 2021.
Investors are now focusing on the US ADP report. Which is predicted to reveal that employment growth in the private sector increased by 115K in December, compared with 103K in November.
The official monthly employment data, also referred to as the Nonfarm Payrolls (NFP) report, is expected to dominate market attention this Friday.
