Major currency pairs traded in subdued ranges on Friday as global markets awaited the release of the US Nonfarm Payrolls (NFP) report, with thin liquidity due to the Good Friday holiday amplifying the potential for volatility. USD/JPY hovered around 159.58, with traders cautious given the proximity to the 160 level, which previously triggered intervention by Japanese authorities. Japan’s Finance Minister Satsuki Katayama warned that authorities are 'ready to act firmly' against excessive foreign exchange volatility, citing active speculative moves in oil and FX markets and emphasizing the government’s preparedness to respond on all fronts [1].
Economists across sources expect the US NFP report to show a modest rebound in hiring, forecasting a 60K increase in payrolls after a sharp 92K decline in February, with the unemployment rate seen unchanged at 4.4% [1][2][3]. A stronger-than-expected jobs report could support the US Dollar, while a weaker reading may weigh on it and offer support to other currencies such as GBP and AUD [1][2][3]. However, ongoing geopolitical tensions, particularly the US-Iran war and the closure of the Strait of Hormuz, are keeping the Greenback broadly supported and fueling inflation concerns, especially for energy-importing economies like Japan and Australia [1][2][3].
AUD/USD eased towards 0.6900 after failing to break above 0.6920, with risk aversion and the unresolved Iran conflict pressuring exporting economies. Australian trade data showed a surplus of 5,686 million in February, beating expectations and supporting the hawkish tone from the Reserve Bank of Australia (RBA) [2]. GBP/USD traded slightly higher at 1.3234, recovering from a four-month low earlier in the week, as modest softness in the US Dollar lent support. The US Dollar Index hovered near 100 after reaching a 10-month high of 100.64 on Tuesday [3].
Market expectations for central bank policy have shifted amid the conflict and inflation risks. Traders have largely priced out Federal Reserve rate cuts, expecting rates to remain on hold through 2026 [1][3]. For the Bank of England, two rate hikes are now anticipated by year-end, though Governor Andrew Bailey cautioned that markets may be getting ahead of themselves, emphasizing the need to focus on growth and jobs alongside inflation [3]. Fed Chair Jerome Powell stated that policy is 'in a good place to wait and see how the current situation plays out,' with inflation expectations 'well anchored beyond the short term' [3].
Currency heat maps from multiple sources show the US Dollar was strongest against the New Zealand Dollar, with minor percentage changes against other majors, reflecting the cautious and range-bound trading environment [1][3].
CONCLUSION
Currency markets remained largely range-bound ahead of the US jobs report, with geopolitical tensions and central bank policy uncertainty dominating sentiment. Intervention risks in USD/JPY, strong trade data for Australia, and shifting rate expectations for the US and UK contributed to a cautious market tone. The outcome of the US NFP report and ongoing geopolitical developments are likely to drive volatility and shape near-term direction for major FX pairs.