- USD/JPY extends recovery as US Initial Jobless Claims for the week ending Dec 27 came in lower-than-expected.
- The Fed is expected to reduce interest rates gradually this year as officials are confident over US economic outlook.
- Japan Kato warned about intervention against excessive FX moves.
The USD/JPY pair bounces back from the intraday low of 156.43 in the North American session on Thursday. The asset recovers as the US Dollar (USD) posts a fresh two-year high, with the US Dollar Index (DXY) rising above 108.80, as United States (US) Initial Jobless Claims for the week ending December 27 have come in lower-than-projected.
The Department of Labour reported that individuals claiming jobless benefits for the first time were 211K, lower than estimates of 222K and the former release of 220K, upwardly revised from 216K.
The Greenback was already performing strongly on expectations that the Federal Reserve (Fed) will reduce interest rates gradually this year.
The pace of interest rate cut by the Fed in 2024 was slightly aggressive as policymakers were focused on improving labor market conditions than lowering price pressures. In the process, the Fed reduced its key borrowing rates by 100 basis points (bps) in last three monetary policy meetings.
For this year, Fed officials have guided fewer interest rate cuts as they are upbeat on the United States (US) economic outlook. The latest dot plot showed that policymakers collectively see Federal Funds rate heading to 3.9% by the year-end.
Meanwhile, the Japanese Yen (JPY) performs strongly against its major peers on Thursday amid worries that Japanese administration could intervene in the FX domain against excessive foreign exchange moves. Japan Finance Minister Katsunobu Kato said last week that authorities are watching FX moves closely and will act to stabilize faltering Yen.
Economic Indicator
Initial Jobless Claims
The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. A larger-than-expected number indicates weakness in the US labor market, reflects negatively on the US economy, and is negative for the US Dollar (USD). On the other hand, a decreasing number should be taken as bullish for the USD.
Read more.Last release: Thu Jan 02, 2025 13:30
Frequency: Weekly
Actual: 211K
Consensus: 222K
Previous: 219K
Source: US Department of Labor
Every Thursday, the US Department of Labor publishes the number of previous week’s initial claims for unemployment benefits in the US. Since this reading could be highly volatile, investors may pay closer attention to the four-week average. A downtrend is seen as a sign of an improving labour market and could have a positive impact on the USD’s performance against its rivals and vice versa.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stays firm near 0.6300 amid modest risk appetite
AUD/USD is posting small gains near 0.6300 in early Asian trades on Monday, opening the week on the front foot. Risk sentiment remains in a sweeter spot following the weekend's news of lower US tariffs on Chinese electronic supply chain. Tariffs talks will remain on the radar.
USD/JPY rises above 143.50 at the weekly opening
USD/JPY is trading well bid above 143.50 amid a positive start to the Holy Friday week. The US Dollar holds the rebound from multi-year troughs, digesting Trump's tariff news from the weekend. The Fed-BoJ policy divergence expectations will keep the Japanese Yen supported, limiting the pair's upside.
Gold retreats from record highs of $3,245 as US Dollar finds its feet
Gold is rereating from record highs of $3,245 early Monday, extending Friday's late pullback. Reducded demand for safe-havens and a broad US Dollar rebound undermine the yellow metal amid the news of not-so-steep US tariffs on China's semiconductors and electronics.
Week ahead: ECB set to cut, BoC might pause as Trump U-turns on tariffs
ECB is expected to trim rates, but the BoC might pause this time. CPI data also in the spotlight; due in UK, Canada, New Zealand and Japan. Retail sales the main release in the United States. China GDP eyed as Beijing not spared by Trump.
Is a recession looming?
Wall Street skyrockets after Trump announces tariff delay. But gains remain limited as Trade War with China continues. Recession odds have eased, but investors remain fearful. The worst may not be over, deeper market wounds still possible.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.