USD/JPY mildly recovers post NFP data on rising Treasury yields

The USD/JPY pair is trading flat at 145.46, after dropping to a three-week low of 144.44. US Nonfarm Payrolls for August beat estimates, but the Unemployment Rate misses, keeping the pair in check. Rising US Treasury bond yields have further supported the dollar, with the USD/JPY trading at 146.196, gains of 0.45%.

The busiest US economic docket concluded with the latest employment report, the Nonfarm Payrolls for August, above estimates, and the economy adding 187K. The Unemployment Rate closed towards the US Fed’s forecast of 4.1% for 2023, missing estimates of 3.5%, the highest level since February 2022.

Manufacturing business activity improved, with the ISM Manufacturing PMI for August rising by 47.6, smashed July’s 46.4 drop, and above estimates of 47. Most subcomponents of the index rose, except for new orders, which are set to improve as factory inventories remained at lower levels. On the Japanese front, manufacturing activity shrank due to costs, as revealed by the Jibun Bank Manufacturing PMI.

The USD/JPY remains bullish, subject to an FX intervention by Japanese authorities, which has remained vigilant. Japanese Finance Minister Shunichi Suzuki said markets should set currencies, though sudden moves are undesirable, and is closely monitoring currency moves. The pair is dipping to a lower low than the previous one at 144.53, opening the door for a deeper correction. Next resistance is at 146.00, followed by the year-to-date high at 147.38.