Japanese Yen loses ground as upbeat US NFP reinforces hawkish Fed outlook

USD/JPY rebounds on Friday, snapping a two-day losing streak as stronger-than-expected US jobs data lifts the US Dollar (USD) and brings its yield advantage over the Japanese Yen (JPY) back into focus. At the time of writing, USD/JPY trades around 158.30 after hitting an intraday low of 157.26.

USD/JPY snaps a two-day losing streak as upbeat US Nonfarm Payrolls lift the Greenback.

Strong US labour market data reinforces expectations of another Fed rate hike in December.

Falling JGB yields weigh on the Yen, offsetting support from safe-haven demand.

The report leaves the Federal Reserve (Fed) with little urgency to step away from its inflation fight, keeping a December rate hike firmly in play.

US Treasury yields also rebound, with the benchmark 10-year yield rising 4 basis points (bps) to 4.88%.

Preliminary University of Michigan data show one-year inflation expectations fell to 4.3% in November from 4.7%, while the five-year measure eased to 3.4% from 3.5%.

Japan’s benchmark 10-year yield trades around 2.63%, near a four-month low and down more than 4% on the day.

When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy.

When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

From FXStreet