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  • The US economy added 136K jobs in September and the unemployment rate falls to 3.5%.
  • Weaker wage growth data does little to inspire bears, through capped any further upside.

The USD/JPY pair finally broke out of its daily consolidative trading range, with bulls now eyeing a move beyond the 107.00 handle post-US jobs data.
The US Dollar managed to gain some traction after the official US monthly jobs report came in to show that the unemployment rate unexpectedly dropped to 3.5% from 3.7% recorded in the previous month and expected.

Mixed US jobs data triggers a modest USD uptick

The reading was strong enough to largely offset a slight disappointment from the headline NFP print, which showed that the US economy created 136K jobs in September, down from the previous month’s upwardly revised reading of 168K (130K reported earlier) and worse than 145K anticipated.
Adding to this, wage growth figures also missed market expectations and came in to show that average hourly earnings remained flat on a monthly basis. The reading was well below consensus estimates pointing to a modest downtick to 0.3% from 0.4% previous, dragging the yearly rate sharply lower to 2.9% from 3.2% previous.
The data might have done little to influence market expectations that the Fed will cut interest rates again at its upcoming meeting on October 30, albeit a weaker tone around the US Treasury bond yields might continue to weigh on the Greenback and keep a lid on any strong follow-through.
With Friday’s key event risk out of the way, it will now be interesting to see if the pair is able to capitalize on the positive momentum or once again run into some fresh supply at higher levels, which might confirm a near-term bearish breakdown and a possible slide further towards testing sub-106.00 level.

Technical levels to watch