USD/JPY settles below 3-week high, posts weekly gain

The USD/JPY currency pair settled below Friday’s high of 145.923, its strongest level since April 10th, as the US Dollar failed to draw lasting support from the latest solid US employment numbers.

Employers in all sectors of the US economy, excluding farming, added 177,000 job positions in April, slowing from the revised down 185,000 in March. Still, job growth surpassed market consensus of 130,000.

The latest figure also came relatively close to the average monthly gain of 152,000 over the past 12 months, despite uncertainty in regard to the Trump administration’s aggressive tariff policy.

Average hourly earnings grew 3.8% YoY in April, matching the rate in March.

Yet, the jobs report does not reflect the full impact of the tariffs, which the Trump administration imposed on April 2nd.

The data cemented expectations that the Federal Reserve will likely keep interest rates on hold next week.

Markets are now pricing in an about 50% chance of a Fed rate cut occurring as early as June, down from 60% prior to the data release.

About 85 basis points of rate cuts by year-end are now priced in, compared to 100 bps previously.

On the tariff front, during a Thursday meeting in Washington, US trade officials displayed reluctance to ease existing tariffs on cars, steel and aluminum. The Nikkei newspaper stated that the Trump administration’s firm stance on the matter left Japanese counterparts concerned about the prospects of forging closer trade ties.

US officials introduced a potential framework for a trade agreement with Japan, while the Japanese delegation presented an overview of initiatives it planned to implement to reduce its significant trade surplus with the United States.

Meanwhile, reports of China reviewing a potential US proposal to initiate discussions over tariffs, introduced some degree of optimism about an easing of the trade tensions between the world’s first two largest economic powerhouses.

The USD/JPY currency pair settled 0.25% lower at 144.953 on Friday.

The major Forex pair gained 0.92% for the week.