Dollar Boosts USD/JPY, Tokyo Takes a Stand!
USD/JPY strengthened slightly to around 160.20 in early Asian trading on Tuesday (June 9), supported by a stronger US dollar amid expectations of continued tighter Fed policy. However, the pair's upside potential remains clouded by the risk of intervention from Japanese authorities as the exchange rate approaches the sensitive 160 area for Tokyo.
The main impetus came from solid US labor data. Nonfarm payrolls (NFP) rose by 172,000 in May (above expectations of 85,000), while unemployment remained at 4.3%. This data reinforces the view that the US labor market remains strong, giving the Fed more room to focus on inflation risks.
Concurrently, the market increased bets on a Fed rate hike. The probability of a 25 bps hike in December is said to have risen to around 43%, up sharply from around 14% a month ago, according to CME FedWatch. This rise in interest rate expectations is supporting the dollar and keeping USD/JPY in the high zone.
On the Japanese side, the warning tone is becoming more pronounced. Finance Minister Satsuki Katayama emphasized that the government is ready to take "firm and appropriate" measures to curb the yen's weakening. This stance has the potential to curb further USD/JPY gains, as the market tends to be cautious about opening new positions when the risk of intervention increases. (asd)
Source: Newsmaker.id
