The USDJPY pair dropped more than half a percent on Friday, undermined by the disastrous labor market data from the US.
Market participants were shocked today as the non-farm payrolls number fell short of expectations massively, posting only 266,000 new jobs in April. The consensus had expected circa one million new jobs.
The miss was a 3.7 sigma miss to expectations and the second biggest miss in history.
Commenting on the data, Bloomberg notes that the payroll data was "literally shocking" with the headline job growth of just 266k, an unemployment rate of 6.1%, and earnings growth of 0.7%," all speaking to a lack of low-skilled job additions." The figure was particularly weak given the revisions of -78k over the past couple of months.
The fragile numbers led to a large decline in US yields, with the 10-year yield falling below 1.5% before retracing the entire move.
The USDJPY pair stopped at the crucial support of 108.30 before bouncing higher. If the pair drop below that level, the medium-term outlook could change to bearish. However, if the greenback defends the 108.30 level, the bulls still have a chance, especially if US yields continue in their reversal.
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