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May 31 - A Bloomberg survey of economists median forecast indicates that the U.S. unemployment rate will remain unchanged at 4.3% in May, while nonfarm payrolls will increase by 89,000. This increase would push the three-month average job growth rate to its highest level in over a year, sparking discussions about a continued acceleration in hiring. Forecasters expect the healthcare sector to maintain its strong momentum, while cyclical sectors such as construction, leisure, and hospitality will also see a recovery, with demand in these sectors likely benefiting from the warm weather of the past month. Manufacturing employment may also be boosted as consumers stockpile goods in anticipation of potential price increases following a potential conflict with Iran.On May 31, according to Iranian state television, Saeed Ajorlou, a member of Irans Media Committee, stated on Saturday that Tehran had not yet approved the final draft of the proposed agreement with the United States, and warned that Iran might withdraw from the agreement if the US failed to fulfill its commitments. In an interview, Ajorlou said that to his knowledge, as of Friday evening, the final text had not been approved, but the differences between the two sides were minimal. He stated, "If the final text is approved, we will enter a 60-day phase of detailed consultations," adding that each of the 14 articles of the agreement contains annexes that require further negotiation. Ajorlou emphasized that the implementation mechanism is more important than the text itself, especially regarding the acquisition of Iranian assets and the fulfillment of commitments by the other side. He stated that the proposed agreement includes a clause allowing Iran to withdraw from the agreement if the other side fails to fulfill its commitments. He indicated that Iran could withdraw from the agreement if violations occur, including breaches of the ceasefire agreement, failure to grant access to Iranian funds, or failure to lift the naval blockade. He added that if commitments are not fulfilled in the initial phase, Iran will reconsider its participation in the proposed 60-day negotiations.The Indian government stated that the current consumption tax rates for gasoline and diesel consumed domestically will remain unchanged.On May 31, local time, Ibrahim Rezaei, spokesman for the Iranian Parliament’s National Security and Foreign Policy Committee, said on May 30 that the naval blockade against Iran “will eventually end, whether through negotiations or military action.”According to the Financial Times, SoftBank has pledged €75 billion to build Europe’s largest artificial intelligence facility in France.

Yields are driving the USD/JPY exchange rate toward 134.50, and anxieties about wage growth and an economic slowdown have turned the focus

Alina Haynes

Aug 18, 2022 11:17

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At Thursday's Tokyo open, the USD/JPY accepted bids to renew intraday lows near 134.90, preserving the week's gains. Recent weakness in the yen pair may be related to speculation about the state of Japan-China ties and the job market in the Asian superpower. Bears can find encouragement in the most recent Fed Minutes. Bears in the session are bolstered by worries of a recession, and bulls in the pair are still holding on.

 

Takeo Akiba, Japan's National Security advisor, and Yang Jiechi, China's Foreign Minister, reportedly agreed to continue discussions to establish a positive and stable alliance, as reported by Japan's local media Jiji earlier in the Asian session.

 

Elsewhere, On Thursday, a monthly Reuters poll showed that more major Japanese companies are increasing pay to attract workers and address persistent personnel shortages. That's encouraging because it suggests Japan's corporate sector is beginning to address the issue of decades of stagnant pay.

 

Current US 10-year Treasury yields of 2.89 percent are down from the week's high of roughly 2.90 percent. Both the disappointing FOMC meeting minutes and the risk-positive China Securities news were ignored by the benchmark bond coupons. According to the Federal Reserve Minutes, officials were unanimous in their support of the 75 basis point rate hike in August and expected future rate hikes to be less rapid. In addition, the Minutes revealed that Fed officials were aware of the risk that the Fed could tighten policy too far.

 

In order to spur investment, China may issue an additional 1.5 trillion yuan in debt, according to China Securities news.

 

As a result of these wagers, the S&P 500 Futures decline by 0.25 percent, reflecting Wall Street's poor showing, while the Nikkei 225 index in Japan has daily losses of close to 1 percent.

 

Trading pairs should focus on the weekly releases of US Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey for August in the absence of other relevant data/events.

 

In order to consolidate their gains, USD/JPY bulls need to push the pair over the 50-day moving average near 135.40. The 21-day moving average is a support level around 134.50, therefore a dip towards that level cannot be ruled out until then.


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