USD/JPY scales to three-day high after robust US NFP report amid Japanese intervention threats

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• USD/JPY ascends to 149.50, rebounding from lows, driven by a US jobs report that eclipsed market expectations.
• Despite a surge, USD/JPY retraces slightly, settling around 149.20, with US 10-year note yielding at a sturdy 4.780%.
• Japanese officials express concerns over Yen volatility, while a rise in the 10-year JGB coupon hints at potential BoJ intervention.

USD/JPY climbs during the North American session courtesy of solid US jobs data, which spurred a jump from the last two days’ lows of 148.26. On its way north, buyers reclaimed the 149.00 mark and hit a three-day high of 149.50, underpinned by high US bond yields.

US bond yields and employment data boost the USD/JPY, though caution is warranted as Japanese authorities watch volatility

The latest US jobs market data revealed by the US Bureau of Labor Statistics (BLS) witnessed the creation of more than 336K employees in the economy, smashing estimates of 170K and 100K more than the 227K August upward revised data. The report shows the labor market remains hot, though it could be influenced by seasonality adjustments.

On the wage front, Average Hourly Earnings rose by 4.2% below the consensus and August’s 4.3%, and the Unemployment Rate was unchanged at 3.8%, higher than the consensus of 3.7%.

The USD/JPY increased towards a high of 149.53 before reversing its course and stabilizing at around 149.20. the US 10-year benchmark note retreated from 2007 highs of 4.887%, but it remains up six basis points at 4.780%.

On the Japanese front, authorities remain vocal in regard to “excessive” Japanese Yen (JPY) volatility in the FX markets. Masato Kanda said on Wednesday, “If currencies move too much on a single day or, say, a week, that’s judged as excess volatility.”

“Even if that’s not the case, if we see one-sided moves accumulate into very big moves in a certain period of time, that’s also excess volatility,” he said.

Although there was no official statement regarding last Tuesday’s 200 plus pip fall of the USD/JPY from around 150.00, the exchange rate remains well-suited below the latter. Of note, it should be said that the 10-year Japanese Government Bond (JGB) coupon has risen to 0.80%, opening the door for the Bank of Japan (BoJ) to intervene and cap the recent rise in yields.

USD/JPY Technical Levels