- USD/JPY is around Wednesday’s close at 128.85, aiming to close below to extend its downtrend.
- US jobless claims were lower than expected, so traders expect further tightening of monetary policy.
- Japanese inflation data expected to rise; what would the BOJ do?
The USD/JPY pair reverses its trend and falls late in the North American session, with a retracement of 0.33% on Thursday. Risk aversion weighed on the US dollar (USD), which extended its losses but was limited by rising Treasury yields. At the time of writing, the USD/JPY pair is trading at 128.33 after reaching a daily high of 128.88.
The USD/JPY pair is trading up and down ahead of the Japanese CPI release.
Wall Street continues to show a subdued mood. Economic data on Thursday in the United States (US) pointed to a tight labor market, as initial jobless claims for the past week fell, down 190,000 from the consensus of 214,000. Other data reported that the US housing market continues to deteriorate. Home construction starts and building permits missed estimates, while the Philadelphia Fed’s manufacturing index, although in contraction territory at -8.9, improved from November’s reading of -13.7.
As traders prepare for Japanese inflation data, the USD/JPY pair has been hovering around 128.40 for three hours.
Last month, inflation in Japan rose to 3.8% year-on-year in November, up from 3.7% in October. Excluding fresh food but including fuel costs, it was up 3.7% yoy versus 3.6% in the previous reading. Excluding food and energy, the so-called Consumer Price Index (CPI) rose 2.8%.
If the Japanese CPI rises above last month’s figures, the USD/JPY pair could extend its downtrend and test the 127.21 yoy low, followed by a challenge to the May 24 swing low at 126.36.
For its part, the Dollar Index, which measures the value of the dollar against a basket of currencies, had two consecutive days of losses and fell 0.34% to 102,034 points.
What must be considered?
In Japan, inflation figures will be published. In the United States, Existing Home Sales and the Fed will be published.
USD/JPY Key Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
