USD/JPY tells a story of a market that isn't sure what it wants to do with the non-farm payrolls data. The headline beat estimates but it's clearly a dovish report with large downward revisions, higher unemployment and weak private payrolls.
"Overall, it was a softer read on the labor market, albeit not dramatically weaker," writes Ian Lyngen, fixed income strategist at BMO.
Still, USD/JPY is about 30 pips higher than before the data. That highlights that there may have been some angst or bets on dollar weakness that are squaring up after the report. The market is also sorting through the UK election yesterday, French election Sunday and the drama in US politics.
The bond market is more-definitive, with Treasury yields lower across the curve, including 2s down to 4.64% from 4.67%.
I think it's growing increasingly clear that the US economy is slowing down as high interest rates do their job. Some of that might be mitigated by AI investment but it could also be masking the weakness elsewhere.
