The Japanese yen steadied against the dollar and major currencies Friday morning as investors positioned ahead of the US nonfarm payrolls report due later in the session. Traders kept positions light while awaiting the crucial labor market data that could shift rate expectations and currency trajectories. Dollar-yen held around the mid-162 level, with the greenback essentially flat at Y162.55 according to LSEG data.

Commonwealth Bank of Australia analysts warned the payrolls report poses upside risks to the dollar-yen pair. Two members of CBA's Global Economic & Markets Research team noted another strong payroll reading could prompt markets to reassess the outlook for US interest rates, potentially driving the dollar toward 165 yen. Such a move would test Japanese authorities who have intervened previously to support their currency.

The Australian dollar slipped 0.1% against the yen to trade at Y111.92. Risk-sensitive currencies broadly held ranges as participants awaited the employment figures that typically influence global rate expectations and carry trade strategies. Asian markets showed cautious trading ahead of the US data release.

Currency strategists expect increased volatility once the jobs report hits. Japanese officials have signaled willingness to intervene if rapid yen depreciation threatens economic stability, creating potential for sharp price action if the dollar surges toward suggested resistance levels.