USD/JPY wavers around 156.70 with all eyes on US employment data

• USD/JPY consolidates around 156.50 ahead of US employment data.
• The US ADP is expected to show a 47,000 net increase in employment in December.
• Growing tensions between Japan and China have provided support to the safe-haven yen on Wednesday.

The Japanese Yen remains trading within a tight range against the US Dollar on Wednesday. The pair moves without a clear bias, both sides of the 156.50 line, with traders looking from the sidelines ahead of the release of key US employment figures later on the day.

The market, however, remains calm ahead of the release of the US ADP Employment Change, which is expected to show that the US economy created 47,000 jobs in December, to offset the 32,000 net losses seen in November.

Later on, the US Bureau of Labor Statistics (BLS) will release November’s JOLTS Job Openings, which are expected to have ticked down to 7.6 million from October’s 7.67 million. These figures will set the tone for Friday’s Nonfarm Payrolls report, and might provide some boost to USD volatility later on Wednesday.

On Tuesday, rising tensions between China and Japan escalated, as Beijing announced a ban on exports of dual-use goods to Japan that might be used for military purposes, in retaliation for Prime Minister Takaichi’s comments about Taiwan. This, coupled with Bank of Japan (BoJ) Governor Ueda’s comments reiterating the bank's commitment to keep hiking rates, has provided some support to the Yen.

The Greenback lost ground earlier in the week, as weaker-than-expected US ISM Manufacturing PMI figures and some dovish-leaning comments by Minneapolis Fed President Neel Kashkari endorsed the market’s view that the Fed might be forced to cut rates more than once in 2026.