The Japanese yen has posted losses in the Thursday session. In North American trade, USD/JPY is trading at 112.67, up 0.32% on the day. On the release front, unemployment claims dipped to 236 thousand, below the estimate of 239 thousand. In Japan, Final GDP in the third quarter is expected to slow to 0.4%. On Friday, the US publishes three key employment indicators – Average Hourly Earnings, Nonfarm Employment Change and the unemployment rate. As well, the US releases UoM Consumer Sentiment.
BoJ Governor Haruhiko Kuroda continues to drop subtle hints about easing monetary policy. On Thursday, Kuroda said that a change in economic conditions could lead the BoJ to raise its yield target, which would be a significant change to current policy. Kuroda noted that an exit from quantitative and qualitative easing would be "quite an important topic" to communicate to the markets. Although Kuroda has insisted that there will be no reduction of stimulus until the Bank’s inflation target of 2% is met, there has been pressure on him to reconsider, given the marked improvement in Japanese economy this year. Although the BoJ is unlikely to tighten policy before next year at the earliest, these deliberate hints indicated that the Bank is thinking ahead to a time when conditions will warrant tightening monetary policy, after years of an ultra-accommodative stance.
In the US, this week’s job numbers have met expectations, as unemployment claims and ADP nonfarm payrolls both beat their estimates. However, the stiffer test is on Friday, with the release of nonfarm payrolls and wage growth. The ADP reading slowed considerably compared to the previous release, and the markets are predicting the same trend for nonfarm payrolls, which is expected to come in at 190 thousand. As one of the most important indicators, nonfarm payrolls could shake up the markets, so traders should be prepared for some movement from USD/JPY in Friday’s North American session.
