USD/JPY plummets below 108 after disappointing NFP figures
- NFP comes in at 75K in May to miss the market expectation of 185K.
- US Dollar Index falls off a cliff following the dismal jobs data.
- 10-year US T-bond yield drops on heightened odds of Fed rate cuts.
The USD/JPY pair lost more than 50 pips in a matter of minutes and fell below the 108 handle as the greenback came under heavy selling pressure following the disappointing labour market data from the U.S. As of writing, the pair was down 0.44% on a daily basis at 107.93.
The U.S. Bureau of Labor Statistics today announced that the total nonfarm payroll employment edged up 75,000 in May to miss the market expectation of 185,000 by a wide margin. Moreover, April's reading got revised down to 224,000 from 263,000 and the wage inflation in the same period ticked down to 3.1% on a yearly basis from 3.2%.
With the dismal numbers ramping up the probability of the Fed cutting rates before the end of the year, the US Dollar Index slumped to its lowest level since late March at 96.59 and was last seen losing 0.3% at 96.69. Moreover, the rate-cut expectations weighed on the 10-year Treasury bond yield and caused it to lose nearly 3% on a daily basis to keep the bearish pressure on the positively-correlated pair intact.
Markets now will be waiting to see how Wall Street starts the day. If stocks show a positive reaction to rate cut expectations, we could see the risk-on flows help the pair recover a part of today's losses.
Technical levels to watch for