Softer US non-farm payrolls and reduced Fed tightening expectations weigh on the dollar, lifting the yen.
USD/JPY fell sharply after weaker-than-expected US non-farm payrolls data reduced expectations for Federal Reserve rate hikes. Markets now price a smaller cumulative increase by year-end, easing dollar strength against the yen.
Prior to the data, Fed rate hike expectations had been elevated, supporting the dollar. The shift in sentiment follows speculation about potential FX intervention and softer labor market signals.
The yen strengthened as traders reassessed the dollar’s outlook amid cooling US economic indicators.