Focus on U.S. Employment Data and Subsequent Response by Japanese Financial Authorities

Today, Tokyo's market is closed for Constitution Day. In Asian markets, following yesterday's trend, the yen is strengthening. The USD/JPY pair has extended its decline into the 152 yen range, and other yen crosses are also falling.

Yesterday's data from the Bank of Japan suggested that a covert intervention of approximately 3.5 trillion yen was carried out in the market on the 1st. An intervention estimated at 5.5 trillion yen appears to have been carried out consecutively on the 29th, which was a holiday in Japan, following a surge in selling of the yen. Moreover, in the NY market on the 1st, after the Fed's announcement, the dollar sold off, and then the yen surged. This move seems to have been timed to coincide with thin trading at the end of NY and a selling of the dollar.

The massive funding for the intervention indicates that an efficient timing was sought. In this context, today's post-U.S. employment data developments are attracting attention. This week's price movements suggest that the levels for yen weakening are increasingly being restrained. While actions seem to be taken while reading short-term speculative positions, if the purpose is to adjust levels, further pushing down the USD/JPY level is conceivable even if the U.S. employment data shows weaker figures.

However, if speculators preemptively tilt their short positions towards a stronger yen, there's a risk that the effect of intervention could be halved. It could turn into a battle of wits between the authorities and speculators.

Moreover, according to reports, Finance Minister Suzuki and BOJ Governor Ueda, who are currently abroad, are scheduled to hold a press conference today at 10:45 PM Japan time. While it's not certain that comments on foreign exchange or monetary policy will be made, questions from reporters are anticipated, and caution is advised. After the close of the NY market this weekend, Charles L. Evans, President of the Chicago Fed, and John C. Williams, President of the NY Fed, are scheduled to participate in a debate. Depending on their remarks, there might be an impact on the market at the beginning of next week.

Other economic indicators to be released in international markets include the U.S. Employment Report (April) and the U.S. ISM Non-Manufacturing Index (April). The closely watched U.S. employment report is expected to show a gain of approximately 240,000 non-farm payroll jobs, a decrease from the previous 303,000. The unemployment rate is expected to remain steady at 3.8%. Wage inflation, as indicated by average hourly earnings, is expected to slightly decelerate to +4.0% year-over-year from the previous +4.1%.

Today, focus on the flow of the U.S. dollar after the Non-Farm Payrolls (NFP) and unemployment rate. With a s