USD/JPY gathers strength above 155.00 as traders brace for return of US data
- USD/JPY strengthens around 155.20 in Tuesday’s early Asian session.
- Traders brace for the US September NFP data, which is due Thursday.
- The Japanese Yen hovers around a nine-month low amid diminishing odds for a December BoJ rate hike.
The USD/JPY pair trades in positive territory near 155.20 during the early Asian session on Tuesday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) as traders continue to gauge the long-awaited return of US economic data and the likelihood of further rate cuts by the Federal Reserve (Fed). The US September Nonfarm Payrolls (NFP) report will take center stage later on Thursday.
A flood of data that was delayed during the US government shutdown is due to be published starting this week, and it is expected to offer some hints on the health of the world's largest economy. Analysts believe that the resumption of US economic data will show job market weakness and a potential slowdown. Any signs of weakness in the US labor market could exert some selling pressure on the Greenback in the near term.
Meanwhile, investors have trimmed expectations of a Fed cut in the December meeting due to the uncertainty. Markets are now pricing in less than a 40% probability of a 25 basis points (bps) rate cut next month, down from more than 60% earlier this month, according to the CME FedWatch tool.
The Japanese Yen remains weak near its lowest level since February despite stronger-than-expected growth data. Japanese Prime Minister Sanae Takaichi urged the Bank of Japan (BoJ) to maintain low interest rates, emphasizing that monetary policy should support both robust economic growth and stable price increases.
Nonetheless, traders are alert to the threat of intervention from Japanese authorities to stem the JPY's weakness. Japan's Finance Minister Satsuki Katayama said last week that she will be watching FX moves with a sense of urgency. Additionally, Japan's Economy Minister Minoru Kiuchi said on Friday that a weak JPY can push up CPI through import costs, warranting caution for the JPY bears.
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