Greenback has bounced-off lows against the yen but remained in a narrow range around mid-105s, as markets remain in a waiting period in the aftermath of Friday’s US NFP report and incoming stimulus headlines. The weakness in USD/JPY was due to the US dollar sell-off due to the employment data disappointment, with only 49K jobs added in January while the jobless rate ticked down to 6.3%.
Earlier on Friday, the USD/JPY rallied on the US stimulus hopes-led reflation trades and due to the relative strength of the economic recovery. But so far today, markets remained divided over the US stimulus optimism and broad-based US dollar weakness due to mixed jobs data.
Favoring the yen, Japan’s benchmark index, the Nikkei 225, topping the 29,000 mark for the first time since 1990 might be providing the lift. Asahi reported that the Japanese government is considering lifting the state of emergency ahead of its scheduled expiry on March 7.
Japanese Chief Cabinet Secretary Katsunobu Kato said Monday, they are closely watching the market moves while declining to comment on stock prices. He said that they sternly protested against China over its patrol ships’ entry into waters near disputed East China Sea islands.
On the other hand, According to the St. Louis Federal Reserve data, the US inflation expectations as measured by the 10-year breakeven rate jumped to 2.21% on Friday to hit the highest level since August 2014. Inflation expectations clocked a low of 0.5% in March 2020, as financial markets crashed on fears of a coronavirus-induced recession and have been rising ever since.
Courtesy of oil price rally and strengthening expectations for aggressive fiscal spending under Joe Biden’s presidency also adds to boost the market investors sentiment.
USD/JPY 4 Hour Chart:
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