The yen fell after US jobs data supported the Fed’s rate hike

TOKYO ( – The yen slumped against other major currencies early Monday, after US non-farm payrolls (NFP) data bolstered the case for further Federal Reserve interest rate hikes, highlighting the widening gap with Japan where the central bank continues to squeeze bond yields. government is close to zero.

Meanwhile, the risk-sensitive New Zealand and Australian dollars weakened amid escalating US-China tensions over Taiwan, with Beijing a major trading partner for the Antipodean nations.

The yen slipped 0.3 percent against the US dollar to 132.47 in early Asian trade, extending a similar-sized decline from Friday, when data showed the US economy continued to add jobs quickly in March.

The yield on the 10-year US Treasury hit 3.413 percent in short trading Friday (7/4/2023) for the Easter holiday. Yields remained high at 3.3776 percent in Tokyo on Monday, when many markets in Asia and Europe remained closed.

Against the euro, the yen dipped about 0.5 percent to 144.49. The yen fell 0.3 percent to 164.54 versus sterling.

The dollar strengthened against the yen on continued strong growth in the US labor market despite sharply rising inflation and interest rates, Mizuho analysts Masafumi Yamamoto and Masayoshi Mihara wrote in client notes.

“Yields in places like the euro area, UK and Australia will follow US yields higher, so there won’t be a huge widening of the yield gap,” they said. “With respect to them, yield spreads will see a much bigger impact in Japan.”

However, the job gains were less than the previous month and the rise in average hourly wages less than economists expected, analysts said Mizuho was inconsistent with a sustained rise in US yields.

Barring a surprise upside in US consumer price data on Wednesday, the dollar has limited room to advance against the yen from current levels, they added.

Japan’s new central bank governor Kazuo Ueda takes over from Haruhiko Kuroda on Monday, and is widely expected to keep his massive stimulus on hold for now. He will give the inaugural address at 1030 GMT.

Meanwhile, the New Zealand dollar slumped 0.6 percent to $0.6238, and the Aussie slipped 0.21 percent to $0.6660. Stock and bond markets in both countries were closed on Monday for the Easter holidays.

The dollar was up 0.12 percent to 6.8830 yuan in offshore trade.

China kicked off three days of military drills on Saturday (8/4/2023) simulating a precision strike against Taiwan, a day after Taiwanese President Tsai Ing-wen returned from a brief visit to the United States.

Also read: Yen regains footing due to caution over bank contagion
Also read: Dollar creeps up in Asia ahead of US nonfarm payrolls data
Also read: The dollar is sluggish in the Asian session as banking worries recede, the yen falls

Translator: Apep Suhendar
Editor: Faisal Yunianto


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