The USD/JPY pair fell by 217 pips on the day to reach 147.22.
The dollar fell to 147.03 in the wake of the nonfarm payrolls report, compared with 149.00 just before the data was released. It is the lowest level since March and erases a big rally in the pair that has caused great concern among Japanese policymakers.
USD/JPY Daily
The reversal in fortunes for this pair turned the Nikkei 225 upside down earlier today as it fell 5.8% in its biggest decline since 1987. Further declines in this pair could cause more damage.
The shirt comes amid a major rethink of US monetary policy levels in the wake of falling inflation and a turning economy. The US unemployment rate rose to 4.3% from 4.1% while 114,000 jobs were added compared to 175,000 expected.
S&P 500 futures are down 1.45% after the data came out following a sharp drop yesterday. The USD/JPY pair acts as a safe haven in times of market stress and there is a huge carry trade in the pair. For now, the area around 146-147 should provide some support, but if we see significant pain in equities, the pair could continue to fall to the lows of 140.
At the moment, the pair is considered very oversold, so I would be cautious about selling while keeping a close eye on stocks and bonds.
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