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USD/JPY clings to post-NFP gains, steady above mid-109.00s ahead of Trump

  • USD/JPY gained some follow-through traction for the fourth consecutive session on Friday.
  • Upbeat NFP report boosted the global risk sentiment and undermined the safe-haven JPY.
  • The intraday USD bounce got an additional boost from a strong pickup in the US bond yields.
  • Investors now look forward to Trump’s news conference on jobs number at 14:00 GMT.

The intraday USD buying picked up pace during the early North American session and lifted the USD/JPY pair further beyond mid-109.00s, or over two-month tops.

The pair prolonged its positive move witnessed over the past four trading session and gained some strong follow-through traction following the release of surprisingly stronger-than-expected US monthly jobs report. The headline NFP showed that the US economy unexpectedly added 2.50 million jobs in May as compared to consensus estimates pointing to a loss of 8 million jobs.

Adding to this, the unemployment rate edged lower to 13.3% from 14.7% in April, beating market expectations by a big margin. The data added to the recent optimism over a sharp V-shaped recovery for the global economic recovery and added credence to the outlook that the worst of the coronavirus pandemic was already over.

The data largely offset concerns about a further escalation in the US-China tensions and provided an additional boost to the already stronger global risk sentiment. This, in turn, weighed heavily on the safe-haven Japanese yen, which coupled with a goodish pickup in the US dollar demand contributed to the USD/JPY pair's rally to the highest level since March 26.

The greenback built on its intraday bounce and was further underpinned by the post-NFP spike in the US Treasury bond yields.

With the latest leg up, the pair has now rallied over 250 pips from the vicinity of the 107.00 mark, tested last Friday. Hence, it will now be interesting to see if bulls are able to capitalize on the move or opt to take some profits off the table amid slightly overbought conditions on short-term charts.

Moving ahead, investors will now take cues from the US President Donald Trump's news conference on the latest jobs report, scheduled at 1400 GMT.

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