- USD/JPY gathers momentum on Friday.
- US Treasury lifts the demand for the US dollar.
- Yen remains sidelined as market mood improves.
The buying interest in the US dollar keeps USD/JPY buoyed in the initial Asian trading hours. The pair touched the levels last seen in March.
At the time of writing, USD/JPY is trading at 110.31, up 0.03% for the day.
The US Dollar Index (DXY), which tracks the performance of the US dollar against the basket of six major currencies, rose to 90.5 on Thursday. The gains in the greenback traced back to the upside in the US 10- year benchmark yields, which rose to 1.63% after upbeat US economic data.
The ADP report showed US companies added 978K jobs in May, beating the market expectations at 650K, the highest in the last 11 months. The Initial Jobless Claims fell to 385K, much lower than the market expected. The Unit Labour Cost rose unexpectedly 1.7% in Q1 as compared to a fall of 0.3%.
The strong labor market and service data supported the narrative of the persistent inflation and sooner than expected Fed tapering. This, in turn, added to the attractiveness of the greenback.
On the other hand, the Japan Prime Minister is likely to call for a snap election after the Tokyo Olympics and Paralympics Games as per a media report. The speculations of another economic stimulus package to be announced before the snap election were also reported. The extension of lockdown in the major states weighs on the yen.
As for now, traders are bracing for US Non Farm Payrolls, Unemployment Rate data to gauge the market sentiment.
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