Non-farm payrolls surge by 178k, triggering a dollar rally; Japan's intervention warning sounds alarm

**Huitong Finance APP News——**The number of nonfarm payrolls in the U.S., seasonally adjusted, surged by 178k in March. Not only did it far exceed the market expectation of 65k, it also completely reversed the bleak trend of negative job growth from the previous month, marking the largest increase since December 2024.

In the same period, the unemployment rate fell to 4.3%, also outperforming expectations; average hourly earnings’ month-over-month growth slowed to 0.2%. The combination of robust employment and moderate wage growth forms the Federal Reserve’s ideal “Goldilocks” economic scenario—showing U.S. economic resilience while also avoiding further upward pressure on inflation.

The standout nonfarm data provided the U.S. dollar with solid fundamental support, and on top of that, risk-averse buying poured in. On Friday, the U.S. Dollar Index rose by about 0.1%, closing higher for the second consecutive trading day, maintaining strength across a basket of global currencies.

The yen weakens across the board as Japan Bank rate-hike expectations cool significantly

Against the backdrop of thin trading activity in the foreign exchange market due to the Good Friday holiday, during Friday’s Asian trading session the Japanese yen weakened across the board against a basket of major and minor currencies. The USD/JPY pair has been in a downward range for the third consecutive trading day; on the day, USD/JPY rose by 0.1% to 159.72.

Japan’s March Tokyo core inflation cooled, becoming the latest signal that inflation pressure is easing. The market’s probability expectation for the Bank of Japan to raise rates by 25 basis points at its April meeting was cut from 25% to 15%, sharply cooling rate-hike expectations.

Investors are waiting for key economic data from Japan—such as inflation, the unemployment rate, and wages—to further assess the forward-looking guidance for the Bank of Japan’s April 28 policy meeting. Uncertainty in the outlook for monetary policy continues to weigh on the yen’s走势.

Japanese authorities repeatedly warn that FX intervention expectations are heating up

Faced with the yen’s continued depreciation, Japanese Finance Minister Katsuya Katayama repeatedly issued warnings to FX traders, noting that speculative activity in the foreign exchange and crude oil futures markets has increased markedly and market volatility has risen significantly. The yen’s weakness has already had a substantive impact on people’s well-being and Japan’s domestic economy.

She reiterated that the Japanese government is ready to take comprehensive response measures from various angles and does not rule out adopting “decisive” intervention actions in the FX market to maintain market stability.

Affected by the situation in the Middle East, in late March the USD/JPY rate broke through the 160-yen level, reaching a rare high since July 2024. The last time Japan intervened in the FX market was in July 2024, when the yen had fallen to a near 38-year low.

Summary and technical analysis:

As the geopolitical conflict in the Middle East continues to intensify, U.S. President Donald Trump made tough remarks regarding Iran, warning that in the coming two or three weeks military action would be strengthened. Iran responded firmly as well, and geopolitical risks keep pushing up demand for the dollar as a safe-haven.

As for the Bank of Japan, although senior officials have said that if economic forecasts match expectations they would continue rate hikes, consolidating the tendency toward tighter policy, BOJ Executive Director Koji Nakamura also pointed out that rising oil prices, while suppressing economic growth, may also push up long-term inflation expectations. The double impact makes the BOJ’s decision-making even more cautious.

With multiple negative factors intertwined, the yen against the U.S. dollar continues to face pressure, and the weak short-term pattern is unlikely to be reversed.

From a technical perspective, the USD/JPY has continued to hold the uptrend, and the overall uptrend structure remains intact for bulls. The support lies in the midline of the rising channel shown by the dashed line and the 159 integer level.

(USD/JPY daily chart, source: Easy-FX under Huitong Finance)

At 21:01 Beijing time, USD/JPY is currently quoted at 159.59/60.

(Editor-in-charge: Wang Zhiqiang HF013)

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