11:26 AM EDT, 05/02/2024 (MT Newswires) -- The balance of risk and reward is more favorable for sellers of USD/JPY and the US dollar more generally, according to Spectra Markets, though the firm is staying on the sidelines ahead of Friday's nonfarm payrolls report.

"I think risk/reward favors USD/JPY down and the USD down in general," said Brent Donnelly, president at Spectra Markets. "I am choosing to remain on the sidelines through NFP, though, as I don't see any particular asymmetry to the release."

US bond yields remain near 2024 highs and the market has come close to pricing out all six of the interest rate cuts that were previously expected this year, which leaves the US dollar short of prospective drivers for another leg higher, Donnelly said in a note to clients on Thursday.

Some recent data suggests the US economy could be heading for a soft patch, including S&P Global PMIs for April, the Q1 GDP report, this week's consumer confidence numbers and the drop in construction job listings revealed in the March JOLTS report on Wednesday.

"Stark warnings" on the outlook for consumer spending from Amazon, Starbucks, CVS, McDonalds, Yum and others are another sign that a further economic slowdown is on the way, and all of this suggests the balance of risk is now listing toward the downside for the US dollar, he said.

The US Bureau of Labor Statistics nonfarm payrolls report is scheduled for 8:30 am ET on Friday. The measure of the change in the number of people employed during the prior month is forecast to come in at 243,000 for April, compared with 303,000 for March, according to Investing.com data shared by Bloomberg.