The USDJPY currency pair was trading down over 76 pips, adding to yesterday’s losses as the Japanese yen rallied against the US dollar. The dollar’s decline today was driven by negative investor sentiment, which started yesterday despite the release of upbeat non-farm payroll data in the early American session.
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The US dollar’s weakness largely drove the currency pair’s weakness despite the non-farm payroll (NFP) data showing that the US created 187,000 new jobs, beating analysts' expectations of 170,000. The upbeat NFP data was overshadowed by the slight increase in the US unemployment rate to 3.8% from 3.5%.
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The higher US unemployment rate and a slight drop in the average hourly earnings from 0.3% to 0.2% contributed significantly to the pair’s weakness. The weak data indicates that the Federal Reserve could pause rate hikes at its September meeting, which is bearish for the dollar.
Since the dollar has been weakened against most of its peers, including the Euro and the Sterling pound, from earlier today, investors were expecting weak numbers today, including for the NFP. The US Dollar index, which tracks the dollar’s performance against a basket of its peers, has fallen today but edged higher yesterday.
However, the US dollar has fallen against the Japanese yen for two days now as the yen proves to be much stronger than its safe-haven peer, the US dollar. Earlier today. Japan’s Finance Minister said that “sudden FX moves are undesirable. The market should set forex moves.” And “FX rates should reflect fundamentals.”
The Finance Minister's verbal intervention positively impacted the yen, which continued rallying against most of its peers. The Japanese yen was much stronger than the euro, the pound, and other leading currencies, such as the Australian dollar.
The yen’s strength has come at the dollar’s expense today. News out of China affected the currency pair’s performance after the People’s Bank of China (PBoC) decided to reduce its Forex Reserve Requirement Ratio (FX RRR) from 6% to 4%.
The PBoC’s strategy will allow more Chinese banks to release their US dollar holdings, effectively reducing the global demand for the US dollar.
The USDJPY price chart.
The USDJPY currency pair was trading down 76.4 pips (0.52%) as the yen rallied against the weak US dollar.
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