USD/JPY: Non-Farm Employment Change

The US Dollar strengthened significantly against the Yen after the stronger-than-expected non-farm payrolls report. After the release, the USD/JPY rose initially by 0.43%, or 50 base points, to be seen trading at 110.57. The Labour Department revealed that the US economy created 209K positions in July, surpassing forecasts for a 185K increase. In the meantime, the unemployment rate dropped to 4.3% from 4.4% in the reported period, matching expectations. Strong figures in conjunction with 0.3% wage growth, the strongest gain since February, provided good signs to expect better CPI and PPI reports this week. In this context, the Federal Reserve would be reassured that further policy normalisation is reasonable, keeping additional rate hikes on the table.