Key event today:

12:30 UTC: USD – Unemployment Rate.

The Japanese yen (JPY) continues its winning streak for the fourth consecutive session as the rise in real wages in July fuels speculation that the Bank of Japan (BoJ) might implement another interest rate hike by the end of 2024. Additionally, the USD/JPY pair has faced headwinds due to the weakening of the US dollar (USD), driven by “dovish” comments from Federal Reserve (Fed) officials.

Bank of Japan (BoJ) board member Hajime Takata stated on Thursday that “if the economy and prices move in line with our forecast, we will adjust the policy rate in several stages.” Takata also noted that the domestic economy is recovering at a moderate pace, despite some signs of weakness. Despite significant volatility in the stock and currency markets, he emphasized that the Bank of Japan still considers the achievement of the inflation target to be attainable.

Traders are likely to await Friday’s labor market data, including US non-farm payroll (NFP) figures, to gain further insights into the potential size of the Federal Reserve’s (Fed) expected rate cut this month.

According to ADP data, the US added 99,000 new jobs in August, lower than the revised July figure of 111,000 and significantly below the expected 145,000. The August ADP figure was the lowest since early 2021, sparking a new wave of risk aversion and heightening investor concerns that the US may enter a recession.

Recommendations: Primarily trade Sell orders from the current price level.