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  • 10-year US T-bond recovers modestly on Friday, stays below 2%.
  • US Dollar Index continues to edge higher toward the 97 mark.  
  • Nonfarm payrolls in the US is expected to expand by 160K in June.  

After spending the day in a very tight range on Thursday, the USD/JPY pair gained traction ahead of the critical labour market data from the U.S. As of writing, the pair was up 0.25% on a daily basis at 108.05.

The broad-based USD strength today seems to be the primary driver behind the pair’s daily advance. Although there were no fundamental drivers directly impacting the USD’s market valuation, the selling pressure surrounding the major European currencies amid Brexit uncertainty and falling Germany Treasury bond yields seems to be ramping up the demand for the greenback. Additionally, a technical rebound witnessed in the US T-bond yields seems to be providing support to the pair.  

The US Dollar Index, which fluctuated in a tight range following Monday’s rally, started to push higher on Monday and was last seen adding 0.23% on the day at 96.95. Markets are now waiting for the Nonfarm Payrolls Report published by the U.S. Bureau of Labor Statistics.

Previewing the data,  “In terms of expectations both our economists and the consensus peg payrolls at 160k. As a reminder, the May print was a much softer than expected 75k which dragged down the three-month trailing average to 151K,” Deutsche Bank analysts said.

“Our colleagues note that from the Fed’s perspective, the year-over-year trend in private employment is more important as this needs to outpace the trend in labor force growth in order to keep downward pressure on the unemployment rate.”

Technical levels to watch for