USD/JPY holds steady near 148.50, all eyes on US NFP release

• USD/JPY trades flat around 148.50 in Friday's early Asian session. 
• ADP and Initial Jobless Claims data indicated a weakening labor market. 
• The US August NFP report will be closely watched later on Friday. 

The USD/JPY pair flat lines near 148.50 during the early Asian session on Friday. Traders prefer to wait on the sidelines ahead of the crucial US economic data. The highly anticipated Nonfarm Payrolls (NFP) for August will take center stage later on Friday.

Data released on Thursday showed that the US Initial Jobless Claims increased more than expected last week, consistent with softening labor market conditions. Additionally, the ADP National Employment Report revealed that US private payrolls increased less than expected in August. 

These job reports suggested labor market weakness and reinforced expectations that the Federal Reserve (Fed) will cut rates this month, which could weigh on the Greenback. Markets are currently pricing in a nearly 100% chance of the Fed cutting interest rates later this month, up from 87% a week ago, according to the CME FedWatch tool. 

Traders will closely watch the US August employment data on Friday. The US economy is expected to add 75,000 jobs in August, little changed from July's 73,000, while the Unemployment Rate is projected to tick up to 4.3% in August, from 4.2% a month earlier.

The uncertainty surrounding the likely timing and pace of Bank of Japan (BoJ) rate hikes amid tariff-related uncertainties could drag the Japanese Yen (JPY) lower and act as a tailwind for the pair. BoJ Deputy Governor Ryozo Himino said on Tuesday that global economic uncertainty remains high, suggesting that the central bank is in no rush to push up still-low borrowing costs. However, BoJ Governor Kazuo Ueda on Wednesday showed readiness to continue raising interest rates if the economy and prices move in line with the BoJ's projections.