USD/JPY steadies around 130.00 as investors await ADP Employment Change

• USD/JPY is balanced above 130.00 ahead of the job additions numbers by the US ADP.
• The US employment numbers are likely to slip as the employment curve has reached its peak.
• The BOJ is inclined to elevate its inflation rate and its maintenance at desired levels.

The USD/JPY is oscillating in a narrow range of 129.90-130.15 in the early European session as investors are awaiting the disclosure of the US Automatic Data Processing (ADP) Employment Change in May. As per the market consensus, the ADP Employment Change is seen at 300k vs. the figure of 247k recorded in April.

No doubt the extent of additions of employment in the US labor force (except farming personnel) is likely to slip this month. The US ADP may disclose a figure of 300k while the consensus for the US Nonfarm Payrolls is 325k. It looks like the upward sloping employment curve will increase at a diminishing rate from now. The US labor market is extremely tight and has reached near its full capacity, which signals less room for more job additions in the workforce.

Also, the employment figures carry more importance this time as they will have a significant impact on the interest rate decision and guidance by the Federal Reserve (Fed). The Fed will dictate its June monetary policy in the third week and an extreme hawkish commentary is expected from Fed chair Jerome Powell.

On the Tokyo front, the Japanese yen is underperforming despite the upbeat employment numbers released this week. The Jobs/Applicants ratio improves to 1.23 while the Unemployment Rate slipped to 2.5%. The Bank of Japan (BOJ) is more focused on accelerating the inflation rate and maintaining the same at elevated levels.