Image Source: Unsplash
 

• USD/JPY extends its recovery to near 144.00 as the US Dollar gains ground ahead of the US NFP data for May.
• Economists expect the US economy to have added 130K fresh workers in May.
• US President Trump expressed confidence of smooth trade negotiations with China.

The USD/JPY pair rises further to near 144.00 during European trading hours on Friday, following the previous day’s recovery move. The pair strengthens as the US Dollar (USD) extends recovery ahead of the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 99.00 after recovering from the six-week low of 98.35 posted the previous day.

The US NFP report is expected to show that that the economy added 130K fresh workers, lower than 171K hired in April. The Unemployment Rate is seen as steady at 4.2%. Meanwhile, Average Hourly Earnings, a key measure of wage growth, is estimated to have grown by 0.3% on month, faster than the prior reading of 0.2%. Year-on-year wage growth measure is expected to have risen by 3.7%, slower than 3.8% in April.

Financial market participants will pay close attention to the US employment data as it will influence market expectations for the Federal Reserve’s (Fed) interest rate outlook.

On Thursday, the USD Index bounced back after the post from US President Donald Trump on Truth.Social indicated de-escalation in trade tensions between Washington and Beijing. “The call lasted approximately one and a half hours and resulted in a very positive conclusion for both countries.” Trump wrote.

On the Tokyo front, the Japanese Yen (JPY) underperforms across the board as investors lack clarity on when the Bank of Japan (BoJ) will raise interest rates again. This week, BoJ Governor Kazuo Ueda stated that interest rate hikes would become appropriate once officials get convinced that the “economy and inflation will re-accelerate after a period of economic sluggishness”.

More By This Author: