USD/JPY is showing little movement in the Monday session, continuing the trend which as marked the pair since last week. In the North American session, the pair is trading at 112.80. There are no major releases to start off the week. Japanese Consumer Confidence dipped to 43.2, shy of the estimate of 44.3 points.
The yen continued to lose ground last week, as the dollar touched a high of 113.05, its highest level in seven weeks. A weaker yen should result in a boost to the export sector, but on Saturday, BoJ Governor Haruhiko Kuroda said that this was not the case for Japan, since many Japanese companies were producing goods overseas. This argument may ring hollow with US president Trump and US exporters, who will likely cry foul if the the yen continues to lose ground. Early in his presidency, Trump accused Japan of manipulating the yen in order to gain a trade advantage over the US. The two sides have since agreed to let their foreign ministers handles issues related to currency matters.
US employment numbers were generally strong on Friday. Nonfarm Payrolls improved to 211 thousand, easily beating the forecast of 194 thousand. The unemployment rate fell to an impressive 4.4%, compared to the estimate of 4.6%. This was the lowest rate since May 2007. The news was not as positive from wage growth remained weak at 0.3%, matching the forecast. Still, with such little slack in the labor markets, we should see wage growth start to move higher. If that happens sooner rather than later, the Fed will have to reconsider a third rate hike in 2017. As things stand now, two more moves is the likely scenario. The positive job numbers have cemented a rate hike in June, as the odds of hike are up to 83%, according to the CME Group.
