USD/JPY consolidates below 140.00, downside seems favored ahead of US labor market data

The USD/JPY pair is displaying a back-and-forth action below 140.00 in the Tokyo session. The asset is expected to extend its downside journey as the upside in the USD Index seems restricted till the release of the United States Employment data.

S&P500 futures are showing nominal gains in the Asian session after a sideways Tuesday. The overall market mood seems quiet as investors are awaiting the release of full-fledged US labor market data.

Optimism about an easy passage of the fresh US debt-ceiling proposal approved by Republicans is barricading the upside for the USD Index. Late Tuesday, House of Representatives Kevin McCarthy urged Republican members to support a bipartisan deal to lift the $31.4 trillion U.S. debt ceiling, calling it the most conservative deal we ever had, as reported by Reuters.

Going forward, the US Employment data will remain in the spotlight. Wednesday’s JOLTS Job Openings are seen declining to 9.375M vs. the prior release of 9.59M. A decline in job openings would indicate that demand for labor is softening. This could be the outcome of tight credit conditions by US regional banks and a bleak economic outlook due to higher interest rates by the Federal Reserve (Fed). Later on Thursday, US Automatic Data Processing (ADP) Employment data will release, which is seen at 170K jobs, lower than the prior addition of 296K.

On the Japanese Yen front, Japan’s monthly Retail Trade (April) contracted by 2.3% while the street was anticipating a stagnant performance. Annual Retail Trade data accelerated by 5.0% at a slower pace than expected at 7.0% and the former release of 7.2%. This could have some pressure on the Bank of Japan (BoJ) as weak retail demand could ease inflationary pressures. BoJ Governor Kazuo Ueda is focused on keeping inflation steadily above 2%.