May non-farm payrolls rose by 172K, crushing forecasts and lifting US yields by 9.6 bps, pressuring Fed policy expectations.
The USD/JPY pair spiked above 160.22 before retreating sharply following a stronger-than-expected US jobs report. Non-farm payrolls added 172K jobs in May, far exceeding the 85K forecast and revising prior months up by a combined 72K jobs. The data underscores persistent labor market strength, complicating the Fed’s inflation-focused policy stance.
The report marks the third consecutive month of robust job gains, contrasting with earlier concerns over a cooling labor market. US 2-year Treasury yields jumped 9.6 bps to 4.14%, while markets now price in a full rate hike by December. The yen’s drop into intervention territory echoes late April, when Japanese authorities stepped in to curb volatility.
The pair’s rapid decline suggests traders are wary of potential official action, though no intervention has been confirmed. The focus shifts to inflation data as the Fed’s dual mandate remains under scrutiny.