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Forex pairs in this Article » USD/JPY (London) - USD/JPY traded lower through the Asian session, despite markets being closed in Japan for a public holiday. The pair added to Friday’s losses on weak non-farm payroll numbers.

Non-farm payrolls dent tapering expectations

US non-farm payrolls added just 74k jobs in December, after November’s upwardly revised 241k print. While Fed members Lacker and Bullard played down the implications of the weak numbers for the Fed’s tapering plans, the USD/JPY pair added to Friday’s sharp drop in the overnight session.

The USD/JPY has been driven by diverging monetary policy expectations. Following the Fed’s decision on 18 December to trim the Fed’s monthly asset purchases by USD10bn to USD75bn-a-month, USD has steadily gained on JPY, starting the year with a three-and-a-half year high at JPY105.4415. While the Fed has been expected to continue its tapering programme through 2014, Japan has pushed in the opposite direction, remaining committed to its JPY7 trillion of bond purchases each month in a fight with deflationary pressures. The weaker non-farm payroll numbers hit the pair on fears that the Fed may be slower to taper its asset purchases.

Quiet session could limit moves

USD/JPY shed 0.65 percent overnight, added to Friday’s declines immediately following the NFP release. USD/JPY is currently trading at JPY103.4350 after challenging JPY105.00 levels on Friday. With little on the agenda today, the pair will struggle recoup any serious ground.
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