The yen sank against major peers on Monday after U.S. payrolls data bolstered the case for further Fed rate hikes, highlighting a growing disparity with Japan.
The dollar strengthened against the yen because of the continued strong growth in the U.S. labor market despite inflation and sharp interest rate rises, Mizuho analysts Masafumi Yamamoto and Masayoshi Mihara wrote in a client note.
"Yields in places like the euro area, Britain and Australia will follow U.S. yields higher, so there won't be a big widening of the yield gap," they said. "Relative to them, yield spreads will see a much bigger impact in Japan." However, the increase in jobs was less than the prior month and the rise in average hourly wages was less than economists forecast, which the Mizuho analysts said was not consistent with a sustained rise in U.S. yields.
Barring an upside surprise in U.S. consumer price data on Wednesday, the dollar has limited room to rise against the yen from current levels, they added.from Haruhiko Kuroda on Monday, and is widely expected to keep massive stimulus in place for the time being. He will give an inauguration speech at 7:30 p.m. JST .
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