Dollar weakens, Japan signals tariff pushback

The dollar-yen pulled back toward the 145.00 area on Friday after extending gains earlier in the week.

USDJPY lost momentum in tandem with the US dollar, which fell below 99.50 following a firm rejection at the 100.00 level. This decline comes as markets digest mixed macro data and renewed trade headlines, including China’s signal to open tariff talks and Japan’s call for US tariff reconsideration.

April’s Nonfarm Payrolls rose by 177,000, above the consensus of 130,000, yet the March figure was revised sharply lower. The Unemployment Rate remained at 4.2%, and wage growth held steady at 3.8% year-on-year.

Despite the strong headline, soft jobless claims and ISM manufacturing data, combined with a Q1 GDP contraction of -0.3%, have reinforced expectations for a potential Fed rate cut in June. The swaps market is now pricing in four cuts through year-end.

In Japan, Finance Minister Kato said UST holdings could be leveraged in US trade talks, signaling a firmer stance against tariffs.

Labour market data were mixed, with unemployment ticking up to 2.5%, and job-to-applicant ratio slightly improved. Despite a relatively tight labour environment, wage growth is decelerating, and the Bank of Japan is expected to maintain its ultra-loose policy through 2025.