Unit labor costs could influence investor expectations of a September Fed rate cut more as a leading indicator of inflation. Firms pass labor costs onto consumers in a higher-demand environment. The Fed may respond to higher labor costs with a more hawkish Fed interest rate trajectory.

However, nonfarm productivity figures will also affect the Fed rate path. Weaker-than-expected figures could signal a deteriorating macroeconomic environment and a possibly weaker consumption outlook.

Other stats include the weekly jobless claims, factory orders, and trade data. Barring an unexpected slump in US factory orders and a spike in jobless claims, the numbers will likely have a limited impact on the USD/JPY.

Short-term Forecast

Near-term trends for the USD/JPY hinge on consumer confidence numbers from Japan and the US Jobs Report. However, a marked improvement in consumer confidence across Japan could tilt monetary policy divergence toward the Yen. The Fed poured cold water on further interest rate hikes. In contrast, the BoJ could respond to an upward trend in household spending.

USD/JPY Price Action

Daily Chart

The USD/JPY remained above the 50-day and 200-day EMAs, affirming the bullish price signals.

A USD/JPY return to the 158 handle would support a move toward the April 29 high of 160.209.

The BoJ Minutes, Japanese consumer confidence figures, and US labor market data need consideration.

Alternatively, if USD/JPY drops below the 154 handle, the bears may attempt to test the 50-day EMA. A fall through the 50-day EMA would bring the 151.685 support level into play.

The 14-day RSI at 56.42 suggests a USD/JPY return to the 158 handle before entering overbought territory.