USD/JPY remains subdued around 138.60s ahead of Friday’s US NFP

• USD/JPY remains trading within a narrow range as traders brace for August’s US NFP.
• The US ADP Employment change disappointed, but Chicago’s PMI exceeded estimates.
• The BOJ would conduct purchasing operations of 10-year JGB notes in September, further confirming its dovish stance.

The USD/JPY is almost in the North American session, unable to crack a fresh YTD high, amidst a dismal sentiment, with US data led by the ADP report below estimates, while the Chicago PMI exceeds estimates. Today’s data, alongside Tuesday’s JOLTs report and consumer confidence, justifies additional tightening by the Fed.

The USD/JPY opened near the day’s highs, around 138.80, and struck a daily low at 138.26. However, buyers stepped and lifted the major towards its daily high at 138.90 before retreating toward current exchange rates. At the time of writing, the USD/JPY is trading at 138.62.

USD/JPY unfazed amid a lack of catalyst

The US ADP report for August showed that private hirings rose by 132K, less than the previous month’s 270K jobs. Worth noting that it’s the first release under a new survey format, so it should not be viewed as a prelude to Friday’s Nonfarm Payrolls report. According to Nela Richardson, ADP Chief Economist, “our data suggest a recent shift towards a more conservative hiring pace,” companies are at an inflection point. She added that hirings could shift from “supercharged job gains” to a more regular cycle.

Later, the Chicago PMI for August increased more than estimated, topping 52.2 vs. 52 expected by analysts.

Earlier, Cleveland’s Fed President Loretta Mester crossed newswires, reiterated her view of the Federal funds rate (FFR) being above 4% by 2023 and “hold it there.” She commented that she does not “anticipate the Fed cutting the FFR next year.”

In the meantime, the US Dollar Index tumbles 0.25% down at 108.547, while the US 10-year benchmark note rate is unchanged at 3.106%, a headwind for the USD/JPY.

Elsewhere, during the Asian session, Japanese retail sales exceeded estimates in July in tandem with consumer and industrial production. Meanwhile, the Bank of Japan (BoJ) announced that it would conduct purchasing operations of 10-year JGB notes, committed to its ultra-loose monetary policy stance.

USD/JPY Key Technical Levels