Market Trends: Central Banks and Trade Policies in Focus
Key macroeconomic drivers influencing currency markets include:
- BoJ Forward Guidance: Intervention threats, inflation trends, and rate path expectations.
- US Economic Data and Tariff Policies: The US Jobs Report and tariff developments.
- AUD/USD Outlook: China’s trade data, Beijing’s stimulus measures, and US-China trade tensions will influence RBA policy expectations and Aussie dollar demand.
Read expert USD/JPY and AUD/USD forecasts here for deeper insights.
The Bank of Japan may have limited options to counter rising JGB yields. President Trump has warned Japan against weakening the Yen, calling it unfair to US manufacturers. The threat could make BoJ Governor Kazuo Ueda and Japan’s government reconsider bond market interventions. This exposes the USD/JPY to further losses as the spring wage negotiations (Shunto) take center stage.
Meanwhile, Rengo, Japan’s leading national trade union center, pointed to the largest wage hike in over 30 years. Another wage surge could fuel BoJ rate hike expectations, increasing the risk of a carry trade unwind and market disruption.
On Friday, March 7, traders should monitor Bank of Japan commentary. Intervention threats could drive the USD/JPY pair toward 150. Conversely, BoJ silence may see the pair test 145.
USD/JPY Trends: US Jobs Report in Focus
Later in the US session, the US Jobs Report could provide insights into the Fed rate path and USD/JPY trends. Economists forecast a steady 4% unemployment rate and 4.1% year-on-year average hourly earnings growth in February.
Softer-than-expected wage growth and higher unemployment could drive expectations for a June Fed rate cut, potentially dragging USD/JPY toward 147.5. Conversely, tighter labor market conditions and rising wages may sink bets on a June move, driving the USD/JPY pair toward 150, a key resistance level.
Beyond the jobs data, investors should closely monitor tariff developments and FOMC members’ views on inflation, employment, and the Fed’s rate path.