USD/JPY surged by over half a percent following the release of positive US payrolls data for May. The data showed a higher-than-expected increase in employment and wages, although unemployment also rose unexpectedly.
The US Nonfarm Payrolls report indicated that the number of employed people in the US rose by 272K in May, exceeding expectations. This news resulted in the US Dollar strengthening, causing USD/JPY to trade in the upper 156s.
The report also revealed a rise in Average Hourly Earnings and a slight increase in the Unemployment Rate. These results suggest that the US labor market is in a better state than previously believed, potentially impacting inflation rates and the Federal Reserve’s interest rate decisions.
In contrast, Japanese real wages fell for the 25th consecutive month in April, highlighting the challenges faced by the Bank of Japan in normalizing its monetary policy. The possibility of the BoJ reducing bond purchases could put upward pressure on Japanese bond yields and the Yen.
Despite the positive movement in USD/JPY, the Japanese authorities may intervene in the foreign exchange markets to support the Yen. Concerns about the negative impact of a weak Yen on the economy have prompted discussions about potential interventions.
Overall, the contrasting economic data between the US and Japan has influenced the recent movements in the USD/JPY pair, with implications for both countries’ monetary policies and currency valuations.