USD/JPY edges lower amid surge in US Initial Jobless Claims

Source Fxstreet
  • USD/JPY edges lower as the US Dollar weakens after a surge in US Initial Jobless Claims for the week ending Nov 29.
  • The JPY stays on the backfoot as BoJ Nakamura doubts the sustainability of wage growth.
  • Investors await the US NFP data for fresh interest rate guidance.

The USD/JPY pair ticks lower to near 150.50 in Thursday’s North American session after the release of the United States (US) Initial Jobless Claims data for the week ending November 29, which came in higher-than-expected. The report showed that individuals claiming jobless benefits for the first time were 224K, higher than estimates the former release of 215K.

Higher jobless claims renewed fears of subdued job demand and punished the US Dollar Index (DXY) by pushing it lower below the key support of 106.00. Meanwhile, investors await key US Nonfarm Payrolls (NFP) data for November to get a clear picture of the current labor market status.

Economists expect the US economy to have added 200K fresh workers, significantly higher than 12K in October. The NFP report stated that payroll employment estimates in some industries were affected by the hurricanes last month. The Unemployment Rate is estimated to have increased to 4.2% from the former release of 4.1%.

Investors will also pay close attention to the US Average Hourly Earnings data to get cues about the current status of wage growth. Higher wage growth drives consumer spending, which could boost inflation and refresh fears of price pressures remaining persistent, a scenario that could weigh on Federal Reserve (Fed) dovish bets for the December meeting.

According to the CME FedWatch tool, there is a 74% chance that the Fed will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50%, while the rest favors leaving them unchanged at their current levels.

Meanwhile, the Japanese Yen (JPY) weakens across the board as a dovish commentary from Bank of Japan (BoJ) board member Toyoaki Nakamura raised doubts over the central bank’s capacity to hike interest rates further. Nakamura said that he is not confident about the sustainability of wage growth and doubts over inflation staying above 2% from fiscal 2025 onward.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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