Dollar Rises Versus the Yen As Attention Shifts to US Employment Report

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Ahead of the critical US Employment report expected out tomorrow that could alter the Fed’s monetary policy, the dollar tended to strengthen against a wide range of its peers, with the effect being exacerbated against safe havens JPY and CHF. Traders are searching for clues on whether the US labor market is tightening or not in tomorrow’s non-farm payrolls report, which is expected to show a 700k job gain last month and a 5.7 percent unemployment rate, according to recent polls.

The dollar is surging against the yen today, and it is holding on to its gains after better-than-expected job news. The dollar, on the other hand, is slipping slightly versus other major currencies, as traders lighten up their positions ahead of tomorrow’s non-farm payrolls. Officials from the ECB and the Bank of England spoke out in favor of the Euro and Sterling. However, they are insufficient to cause a significant rebound.

On the other hand, safe-haven assets such as Treasuries, the US dollar, and the yen seem to remain in demand given the rapid spread of the COVID-19 Delta variant, which could slow the global economic recovery. Countries such as Indonesia, Malaysia, Thailand, and Australia are reportedly grappling with the pandemic, while several European countries have announced quarantine measures for British nationals.

Dollar/Yen Jumps on Better Than Expected US Initial Jobless Claims

On Thursday, the Japanese yen continued to lose ground. USD/JPY is currently trading at 111.57 in the American session, up 0.43 percent on the day. The pair has reached its highest point since March 2020.

The number of initial claims for unemployment benefits in the United States for the week ending June 26 fell by 51 thousand to 364 thousand, which is better than expectations of 382 thousand. This is the lowest level since March 14, 2020. The four-week moving average of initial claims fell -6K to 392.75K, the lowest since March 14, 2020.

For the week ending June 19, the number of ongoing claims increased by 56 thousand to 3469 thousand. The average moving average for four weeks fell by -75 thousand to 3482 thousand, which is the lowest since March 21, 2020. The underpinning positive tone in financial markets, as seen by a protracted rally in global equities markets, continued to erode demand for the safe-haven Japanese yen. Bullish traders were also influenced by a sharp increase in US Treasury bond yields.