USD/JPY Jumps and Dips in Post-NFP Action, But Friday Ends Where It Began

• USD/JPY ⁤soared to 146.00⁣ before dropping back during pre-NFP market runup
• Yen on track for another big down week, falling 1% against major currencies
• Broad-base JPY‍ selling to dominate ‍market themes as Yen pairs ⁢rebalance recent losses

The USD/JPY soared ⁣to a near-term high ‌at 146.00 early Friday in the broad-market run-up⁢ to the US Nonfarm Payrolls release, which surged above market forecasts and sent the US Dollar (USD) back down against the Japanese Yen (JPY) as markets weighed⁤ odds of Federal Reserve (Fed) rate cuts⁤ in ⁢the⁣ face of a still-firm US labor market.

US Average ⁢Hourly Earnings for the year ended ‌in December climbed to 4.1% compared to November’s 4.0% print, climbing over the market forecast of a slight ⁣decline to 3.9%, and the NFP showed the US added 216K net jobs to the economy ‍in December, well above the market’s expected print of 170K. December’s NFP ‍print came in at ⁣a three-month high, though revisions can ⁤be expected in the coming months with November’s final ⁣print getting revised down from 199K⁤ and October⁤ seeing a second set of revisions bringing the ⁢total down from 150K ⁢to 105K.

See More: US Nonfarm Payrolls rise by 216,000 in December vs. 170,000 expected

With the US labor‍ market continuing to show more strength than ​investors ‌were expecting or hoping for, odds⁣ of a sooner rather than ⁣later rate cut from the Fed are diminishing, and money markets are now pricing in a 60% chance of a March rate cut, compared to around 90% as recently as December.

Next week kicks off ​with a ​fresh reading of Japan’s Tokyo Consumer Price Index (CPI), and investors will be keeping a close watch on Japan inflation‌ figures‍ as markets continue⁤ to look ⁢for signs of the Bank⁢ of Japan (BoJ) getting pushed out of⁤ its deeply-entrenched hyper easy ‌monetary policy ⁢hole.

Japan’s⁢ Tokyo CPI last printed at 2.6% for the year ended‍ December, ​a 12-month low after headline inflation in Japan reached 4.4% in January of 2023. Despite the rapid and steady decline in inflation, the BoJ has taken a widely opposite stance‌ of most major central banks, and is overwhelmingly ‍concerned about inflation falling too fast, too far below the​ BoJ’s⁢ target of‌ 2%,⁣ with the Japanese central bank worried about ⁢inflation lagging‌ below their minimum target some ⁤time in 2025.

Core Tokyo CPI (headline inflation less Fresh Food prices) is forecast to slip from 2.3% to 2.1% for the year through December.

USD/JPY Technical Outlook

Friday made a mess of‍ the USD/JPY intraday charts after the ​post-NFP plunge, tapping 146.00 and dipping below 144.00 before settling the⁣ day close to where it started near 144.50.

Steady Yen ⁤selling has seen the USD/JPY climb through the first week of 2024, and the pair is up a little over 3% from‌ December’s swing⁢ low of ⁣140.25.

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