Non-farm payrolls surge by 178k, triggering a dollar rally; Japan's intervention warning sounds alarm

Huitong Finance App News—— U.S. March nonfarm payrolls after seasonal adjustment surged by 178,000, not only far exceeding the market expectation of 65,000, but also completely reversing last month’s downturn in employment growth, marking the largest increase since December 2024.

Meanwhile, the unemployment rate fell to 4.3%, also coming in better than expected; average hourly earnings’ month-over-month growth slowed to 0.2%. The combination of strong employment and moderate wage growth forms the Fed’s ideal “Goldilocks” economic scenario—highlighting the resilience of the U.S. economy while avoiding further upward pressure on inflation.

The standout nonfarm data provided solid fundamental support for the U.S. dollar, and combined with a surge in safe-haven buying, the U.S. Dollar Index rose by about 0.1% on Friday, closing higher for the second consecutive trading day, maintaining strength against a basket of global currencies.

The yen weakens across the board as expectations for a rate hike by the Bank of Japan cool significantly

Against the backdrop of thin FX trading activity during the Good Friday holiday, in the Asian trading session on Friday the yen weakened across the board versus a basket of major and minor currencies. The USD/JPY pair has been in a downward range for the third consecutive trading day; on the day, USD/JPY rose by 0.1% to 159.72.

Japan’s March Tokyo core inflation slowed, becoming the latest signal of easing inflation pressure. Market expectations for the Bank of Japan to hike rates by 25 basis points at its April meeting were lowered from 25% to 15%, and rate-hike expectations cooled significantly.

Investors are now waiting for key economic data from Japan—such as inflation, unemployment, and wages—to further assess the forward guidance for the Bank of Japan’s policy meeting on April 28. Uncertainty about the outlook for monetary policy continues to weigh on the yen’s performance.

Japanese authorities repeatedly warn as expectations of currency intervention heat up

Facing continued yen depreciation, Japan’s Finance Minister Ayumi Katayama repeatedly issued warnings to FX traders. She pointed out that speculation in the foreign exchange and crude oil futures markets has clearly increased, and market volatility has risen significantly; the yen’s weakness has already had a tangible impact on the well-being of the public and on Japan’s domestic economy.

She reiterated that the Japanese government is prepared to take comprehensive measures from various angles, and will not rule out adopting “decisive” intervention actions in the FX market to maintain market stability.

Affected by the situation in the Middle East, in late March the USD/JPY pair broke above the 160-yen level, reaching a rare high since July 2024. Meanwhile, Japan’s last FX market intervention was in July 2024, when the yen fell to its lowest level in nearly 38 years.

Summary and technical analysis:

The Middle East geopolitical conflict continues to escalate. U.S. President Donald Trump made tough remarks on Iran, warning that over the next two or three weeks military action will be strengthened. Iran responded firmly, with geopolitical risk continually boosting demand for USD safe-haven assets.

Regarding the Bank of Japan, although senior officials said that if economic forecasts meet expectations, rate hikes would continue—strengthening the tightening bias—Bank of Japan Executive Director Koji Nakamura also noted that rising oil prices may, while suppressing economic growth, also push up long-term inflation expectations. The dual impact makes the central bank’s decision-making even more cautious.

With multiple negative factors intertwined, the yen versus the U.S. dollar has continued to face pressure, and the bearish near-term pattern is unlikely to be reversed.

Technically, as USD/JPY has continued to hold above the rising trendline, the uptrend structure is still intact. Support lies in the middle line of the rising channel shown by the dashed line, as well as at the 159 integer level.

(USD/JPY daily chart, source: Ezfinance under Huitong Finance)

At 21:01 Beijing time, USD/JPY is trading at 159.59/60.

(Editor: Wang Zhiqiang HF013)

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