USD/JPY holds steady above 106.00 mark, lacks follow-through ahead of NFP
- USD/JPY remained confined in a range through the first half of the trading action on Friday.
- Rebounding US equity futures, a modest pickup in the US bond yields extended some support.
- The upside seems limited as investors seemed reluctant ahead of the US monthly jobs report.
The USD/JPY seesawed between tepid gains/minor losses through the early European session and was last seen trading just above the 106.00 round-figure mark.
The pair remained confined in a range through the first half of the trading action on Friday and consolidated the previous day's pullback of around 40 pips from weekly tops. A sharp turnaround in the global risk sentiment – as depicted by a rout in the US equity markets – benefitted the Japanese yen's safe-haven status. Apart from this, the emergence of some fresh selling around the US dollar exerted some pressure on the USD/JPY pair.
Meanwhile, a goodish pickup in the US Treasury bond yields helped revive the USD demand on the last trading day of the week and extended some support to the USD/JPY pair. This coupled with a modest bound in the US equity futures further collaborated towards limiting the downside for the major, at least for the time being. However, the upside is likely to remain limited ahead of Friday's release of the closely watched US monthly jobs report.
The headline NFP is expected to show that the US economy added another 1.4 million jobs in August as compared to the previous month's 1.763 million. The unemployment rate is expected to tick down to 9.8% from 10.25% in July. Any disappointment will add to the uncertainty over the outlook for the economy and reinforce expectations that the Fed will keep rates lower for longer. This, in turn, would be enough to continue exerting pressure on the greenback and set the stage for some near-term weakness for the USD/JPY pair.
Technical levels to watch