In the report, researchers noted that "large corrections in monthly employment data" are possible. The president of the Dallas Federal Reserve Bank, Lorie Logan, stated on Thursday that they are ready to maintain the current interest rates for a "sufficiently long time," even if inflation approaches the Federal Reserve's target of 2%, provided that the labor market remains stable. The dollar index, which reflects the exchange rate of the American currency against the yen, pound sterling, and other major currencies, remained stable at 107.71 after reaching 109.88 earlier this week due to concerns about US tariffs.
The yen continued its upward movement amid expectations of further hikes by the Bank of Japan. Strong impact from rising rates, bolstered by this week's labor pay data, makes the yen candidates for the best performer against the dollar by the end of November. The Bank of Japan is expected to raise rates by at least 1% by the second half of the fiscal year 2025.
Barclays strategists Shinya Kadota and Lhamsuren Sharavdemberel see additional growth potential for the dollar-yen pair in the near term as annual negotiations on labor pay in Japan. "We expect that annual wage negotiations in Japan will lead to another sustainable increase this year, while inflation remains above 2%, which should keep the Bank of Japan on an aggressive stance," they wrote in a note.
Recent actions of the Trump administration continue to keep investors on edge. Meanwhile, as the American dollar and other major currencies remain stable in anticipation of the publication of monthly employment data in the US. For the week marked by volatility and important headlines about tariff threats in the US, traders focused on upcoming employment data in the US, continuing to pay attention to geopolitical events and broader actions of President Donald Trump.
The labor market in the US showed resilience. Trump continues to uphold imposed tariffs on Mexico and Canada this week, although he introduced an additional duty of 10% on imports from China. The snapshot yuan remained at the level of 7.2902 against the dollar, remaining within its latest range, although risks for reductions remain.
As for the dollar and yen, US federal regulators assess Trump's policies, determining the future direction of interest rates. According to market expectations for the near future, the likelihood of a Fed rate cut in July is 43%, according to the CME FedWatch tool. The dollar maintained its position against the yen at 151.555 after a brief drop below 151 in early trades in Asia. Investors also consider the likelihood of two rate cuts in 2025, likely by 44 basis points. The euro slightly changed, amounting to $1.0385, while the pound remained at $1.2438.
A Reuters poll among economists suggests that the unemployment rate in January is expected to remain unchanged at 4.1%, with an anticipated addition of 170,000 jobs. The yen approached a nine-year high due to rising rates in Japan throughout this year. However, analysts warn that January's employment data may be difficult to interpret. Commerzbank analysts pointed out that "significant shifts" in the US population growth reported in December could "complicate market reactions."
