• US job creation beats expectations by a wide margin in April, but the US Dollar remains under pressure.
• Intervention threats from Japanese authorities continue to limit Japanese Yen selling.
• Geopolitical tensions in the Middle East continue to sustain some safe-haven demand.

USD/JPY edges lower on Friday and trades around 156.65 at the time of writing, down 0.17% on the day, despite the release of a stronger-than-expected US employment report. Markets remain cautious due to the risk of further intervention from Japanese authorities, preventing the pair from gaining traction above the psychological 157.00 level.

Data released by the Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls (NFP) in the United States (US) increased by 115K in April, well above the market consensus of 62K. March’s figure was also revised higher to 185K from the previously reported 178K. The Unemployment Rate remained unchanged at 4.3%, in line with market expectations.

However, Average Hourly Earnings rose by 3.6% YoY, below the 3.8% forecast, limiting support for the US Dollar. The US Dollar Index (USD) remains under pressure, losing 0.38% on the day to 97.90.

The Japanese Yen (JPY) also continues to benefit from persistent intervention risks from Tokyo. Japan’s top currency diplomat, Atsushi Mimura, reiterated on Thursday that authorities face “no limits” regarding the frequency of interventions aimed at supporting the Japanese currency. He also stated that he remains in daily contact with US authorities to curb speculative moves in the Japanese Yen.

Markets remain focused on the large-scale interventions reportedly conducted by Japan’s Ministry of Finance since late April. According to Reuters, Japan may have spent more than 5 trillion JPY during its first intervention after USD/JPY crossed above the 160.00 threshold.

MUFG nevertheless believes that these operations could have a limited long-term impact without a more aggressive shift in Bank of Japan (BoJ) monetary policy. The bank noted that recent Japanese wage growth and inflation data remain relatively weak, which could reinforce the BoJ’s cautious stance despite persistent expectations of a rate hike in June.

On the geopolitical front, tensions between the United States and Iran in the Strait of Hormuz are also supporting safe-haven demand. US President Donald Trump nevertheless stated that the ceasefire remains in place, while Iranian authorities continue to review a US proposal aimed at ending the conflict.