USD/JPY extends sideways grind below 110.00 ahead of US NFP data
- USD/JPY climbed to a fresh weekly high on Friday.
- 10-year US Treasury bond yield continues to push higher.
- US Dollar Index stays in the positive territory ahead of NFP report.
After closing in the previous two days in the positive territory, the USD/JPY pair continued to edge higher and touched its strongest level in a week at 109.89. Ahead of July labour market data from the US, however, the pair seems to have gone into a consolidation phase and was last seen posting small daily gains at 109.79.
Investors await NFP, eyes on US T-bond yields
The sharp upsurge witnessed in the US Treasury bond yields in the second half of the week provided a boost to USD/JPY. Although the benchmark 10-year US Treasury bond yield is rising nearly 2% on Friday, the pair's action remains subdued. Meanwhile, the US Dollar Index is clinging to modest daily gains near 92.40, helping USD/JPY stay afloat in the green.
Later in the session, the US Bureau of Labor Statistics is expected to report an 870,000 increase in Nonfarm Payrolls (NFP) in July. A stronger-than-expected print could help USD/JPY climb above 110.00.
Previewing the NFP publication, "job creation likely heated up in the US in July as higher wages along with recruitment efforts could have paid off for employers in service sectors. It’s likely that hiring accelerated to 1010K in July, pushing the unemployment rate down to 5.6%," said CIBC analysts. "We’re above the consensus which could be supportive for the USD and bond yields."
NFP Preview: Forecasts from seven major banks for July jobs report, estimates vary more than usual.
Technical levels to watch for