- USD/JPY is aiming to shift its auction profile above 145.00 amid weaker market sentiment.
- The tight US labor market is responsible for lower projections of US NFP.
- Geopolitical tensions between Japan and North Korea have impacted the yen bulls.
The USD/JPY pair is oscillating above the critical hurdle of 145.00 and is expected to sustain above the same by shifting its auction profile higher. The asset is expected to remain in the grip of bulls as the market sentiment is advocating a risk-aversion theme amid geopolitical tensions. Also, the upcoming event of the US Nonfarm Payrolls (NFP) has kept the risk-perceived currencies on the tenterhooks.
On Thursday, the major managed to cross the hurdle around 144.80, which pushed the asset above the 145.00 figure. The pair witnessed strong demand due to the sheer strength of the US dollar index (DXY). The mighty DXY recaptured the 112.00 hurdles and established itself above the same on soaring yields. The 10-year US Treasury yields printed a fresh weekly high at 3.85%.
Considering the price action, the DXY is expected to cross the immediate hurdle of 112.31 confidently. As per the CME Fedwatch tool, the probability of announcing a 75 basis point (bps) rate hike in the first week of November by the Federal Reserve (Fed) has reached 66%.
Going forward, the US Nonfarm Payrolls (NFP) data will be of utmost importance. According to the estimates, the payroll data will display addition of 250k against the former addition of 315k. The US labor market is extremely tight, therefore room for more addition is extremely low. Therefore, the DXY will continue its upside momentum.
On the Tokyo front, ongoing tensions between Japan and North Korea after frequent missile launches by the North Korean military have discarded international peace. Japanese Deputy Chief Cabinet Secretary Seiji Kihara has condemned the missile launches activity by North Korea, as reported by Reuters. He further added that "North Korea may increase provocative operations, including nuclear tests."
Apart from that, lower-than-projected Overall Household Spending data has impacted the yen bulls. The economic data has landed at 5.1%, lower than the projections of 6.7% but remained higher than the previous release of 3.4%. In spite of continuous deployment of funds into the economy by the Bank of Japan (BOJ), downbeat Overall Household Spending data is a reason to worry.
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