Surprise weakness in US nonfarm payrolls sent the yen sharply higher on Friday,
but traders remained cautious about renewed Japanese intervention after Tokyo
and Washington jointly stepped into FX markets only days earlier to support the
weak currency. USD/JPY slid as much as 1.1% to about 156.68, well below July's
40-year peak of 163.99. It is unclear whether Japanese authorities participated
in the move. Moves at the short end of the US yield curve reflected dollar
weakness and a softer Fed tightening outlook. Mitsubishi UFJ senior FX
strategist Lee Hardman said: "Nonfarm payrolls were much lower than expected, so
dollar weakness is reasonable—look at the front end of the US yield curve. This
is a rare downside surprise and clearly weakens market expectations for the Fed
tightening. We expect a marked market reaction and broad dollar selling."
