USD/JPY extends advance as firmer US labour data lifts the Dollar ahead of Fed decision
The Japanese Yen (JPY) weakens against the US Dollar (USD) on Tuesday, with USD/JPY extending gains for the third straight day as the Greenback strengthens following firmer labour market data. At the time of writing, the pair is trading near 156.90, its highest level since November 25.
Fresh US labour data helped support the Dollar on Tuesday. The ADP Employment Change 4-week average improved to 4.75K from -13.5K, reinforcing the view that conditions may not be cooling as sharply as feared.
The data stand in contrast to last week’s ADP Employment Change, which unexpectedly showed a 32,000 decline for November after a revised 47,000 gain in October.
JOLTS Job Openings also exceeded expectations for both September and October. September registered 7.658 million openings against the 7.2 million forecast and 7.227 million in the previous month, while October printed 7.67 million compared with the 7.2 million consensus.
The data did little to sway expectations for Wednesday’s Federal Reserve (Fed) interest rate decision, with markets still convinced the central bank will deliver another 25 basis point (bps) cut.
However, the Dollar is also drawing support from expectations of a hawkish cut, with analysts suggesting the Fed could signal a long pause through 2026 as policymakers assess the impact of earlier reductions while inflation remains above target and the labour market shows no signs of severe deterioration.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.27, extending gains after Monday’s modest recovery.
On the Japanese side, the Yen continues to struggle for traction even as expectations grow that the Bank of Japan (BoJ) will raise rates at its December 19 meeting, potentially lifting the policy rate to around 0.75%.
BoJ Governor Kazuo Ueda said earlier on Tuesday that the recent rise in long-term Japanese Government Bond yields has been “somewhat rapid,” adding that the central bank stands ready to step into the bond market if volatility persists. Ueda also noted that underlying inflation appears to be converging toward the BoJ’s target.
At the same time, fiscal authorities remain alert to sharp currency movements. Prime Minister Sanae Takaichi reiterated earlier in the day that Tokyo will take “appropriate action” if the Yen weakens too rapidly.
Source : Fxstreet.com
