Comment: USD/JPY respects support, focus turns to payrolls
07/03/2024 17:00
March 7 (Reuters) - Another leg lower for USD/JPY as the
pair continues to chase the fall in U.S. treasury yields.
Meanwhile, the move has also been aided by more Bank of Japan
policymakers – this time from Junko Nakagawa – signalling their
increased confidence that inflation is heading towards its
target.
That said, the key trigger point for BoJ officials is wages.
According to Japan’s largest trade union group Rengo, wage
demands are averaging 5.85%, above the 4.49% in 2023. Thus, this
provides initial indications that wage growth will be sufficient
enough to pave the way for a BoJ rate hike. Although, whether
this means the BoJ will hike in March is uncertain as markets
continue to attach around a 45% chance of a March lift-off.
USD/JPY fell to the 100-DMA (147.66), which has so far
limited further downside. The recovery back above 148 has also
coincided with yields picking back up.
Looking ahead, market attention will be on non-farm payrolls
to see whether the January report was an aberration.
A downside surprise, coupled with softer wage data would
likely provide the greenlight for USD/JPY to slip through 147.
As previously highlighted, market sensitivity to the jobs report
has increased of late urn:newsml:reuters.com:*:nL1N3EN0N2.
On the flipside, while another strong payrolls print is
likely best expressed via USD upside versus EUR and NZD.
For more click on FXBUZ
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(Justin McQueen is a Reuters market analyst. The views
expressed are his own.)
((justin.mcqueen@thomsonreuters.com))