USD/JPY Volatility Continues Ahead of US NFP Data and CPI Report

The Japanese yen's decline has resumed after a brief rebound ahead of this week's US nonfarm payrolls (NFP) data. The USD/JPY exchange rate fell to 155.20 earlier in the week but recovered to 158.41 as traders took advantage of the dip. This volatility is attributed to recent interventions by the United States and the Bank of Japan, with estimates suggesting that the US spent billions of dollars rescuing the yen.

According to data from the FT, the Bank of Japan also spent over $50 billion in these interventions last week alone, bringing its total for this year to over $120 billion. The US has an incentive to intervene as Japan is the largest foreign holder of US debt, with holdings exceeding $1.14 trillion.

Economists expect the NFP data to show that the economy added over 88k jobs last month after creating 57k in the previous month, with the unemployment rate remaining at 4.2%. A strong US data print is likely to push USD/JPY back towards the 160 resistance area.