- USD/JPY slips as the US Dollar weakens following a rise in US Initial Jobless Claims for the week ending Nov 29.
- The JPY remains under pressure as BoJ's Nakamura questions the sustainability of wage growth.
- Investors look to the upcoming US NFP data for new guidance on interest rates.
The USD/JPY pair edges lower to around 150.50 during Thursday’s North American session following the release of higher-than-expected US Initial Jobless Claims data for the week ending November 29. The report showed that first-time jobless claims reached 224K, surpassing both estimates and the previous release of 215K.
The rise in jobless claims reignited concerns over weak job demand, sending the US Dollar Index (DXY) below the key support level of 106.00. Investors are now focused on the upcoming US Nonfarm Payrolls (NFP) data for November to gauge the health of the labor market.
Economists forecast that the US economy added 200K jobs, a significant increase from the 12K in October. The NFP report noted that employment estimates in some sectors were impacted by last month's hurricanes. The Unemployment Rate is expected to rise to 4.2% from 4.1%.
Market participants will also scrutinize the US Average Hourly Earnings data for insights into wage growth. A rise in wages could spur consumer spending, potentially boosting inflation and renewing concerns about persistent price pressures, which could dampen dovish expectations for the Federal Reserve's December meeting.
The CME FedWatch tool shows a 74% chance of a 25 basis point rate cut, bringing the Fed’s key borrowing rate to 4.25%-4.50%, while the rest expect no change.
Meanwhile, the Japanese Yen (JPY) weakens across the board after dovish comments from Bank of Japan (BoJ) board member Toyoaki Nakamura raised doubts about the central bank's ability to continue rate hikes. Nakamura expressed concerns over the sustainability of wage growth and questioned whether inflation would remain above 2% beyond fiscal 2025.
