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Higher US Yields Prompts Renewed JPY Weakness, Greenback Firms

FOREX
  • While the mixed headlines within the US employment report prompted some initial two-way trade for the greenback, the higher-than-expected payrolls figures have kept the US dollar on the front foot on Friday with the USD index rising around 0.5% as we approach the week’s close.
  • While the significant pressure on the front-end of the Treasury’s curve has underpinned the greenback strength, the more notable move in G10 currency markets has been the renewed JPY weakness which sees USDJPY breaking back above 140.00 in late session trade.
  • With the bounce, bullish technical conditions remain intact and attention is re-focused on the top of a bull channel, drawn from the Jan 16 low which intersects at 140.96 and represents a key resistance. A clear break of it would reinforce trend conditions and open 141.61, the Nov 23, 2022 high.
  • The clear outperformer on the day remains the Australian dollar, rising 0.5%. Despite paring around half the overnight gains following the US data, the powerful overnight rally cements AUD as one of the best performing majors on Friday. Price action remains underpinned by chances of another rate hike at the RBA's June 6 meeting having risen following a sharp jump in the country's minimum- and award-wage system and a persistently high monthly inflation print earlier in the week.
  • The greenback strength was enough to unwind the initial USDCNH weakness following reports that China is weighing a property market support package as a means to boost the economy. The Chinese Yuan trades closed to unchanged for Friday’s close as of typing, having bounced off the 7.0670 lows.
  • Monday sees Swiss CPI and final European services PMI readings before the release of US ISM Services PMI data for May. The RBA and BOC decisions highlight the central bank calendar.
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