- USD/JPY is trading at 145.60, down 0.42%, as positive US data fails to lift the pair; the DXY rising 0.51% to 103.718, but failing to boost USD/JPY.
- CME FedWatch Tool suggests the Fed will keep rates on hold in September.
- Japan’s retail sales beat expectations with a 6.8% year-on-year increase, but a disappointing 2.4% contraction in Industrial Production adds to the Bank of Japan’s political quandary.
He dollar (USD) losses vs. Yen (JPY) after reaching a daily high of 146.22, returning below 146.00. Data from the United States came in better than expected, but failed to spice up USD/JPY. The pair is trading at 145.60, down 0.42%.
Dollar struggles to make gains against the Yen despite better-than-expected data
The busy weekly economic schedule maintains volatility in most US dollar-linked currency pairs. Following the session on Tuesday and Wednesday, the US dollar was under a lot of stress. However, it regained some of its composure against most of the G10 currencies, with the exception of the Japanese yen.
The US Department of Commerce revealed that the US Federal Reserve’s (Fed) preferred inflation gauge, Core Personal Consumption Expenditure (PCE), was as expected, up 4.2% year-on-year and 0.2% mom, as both numbers matched street forecasts. As for headline inflation, the PCE was unchanged at 3.3% YoY and 0.2% MoM.
Other data showed initial jobless claims for the week ending Aug. 26 stood at 228,000, below the forecast of 235,000, according to the US Labor Department. This is contrary to the latest employment data published, which indicated that the labor market was losing.
Today’s data, added to earlier US jobs releases, along with end-of-month flows, support the US Dollar (USD), which has bottomed out and is rising according to the Dollar Index (DXY). The DXY, an index that tracks the evolution of a basket of six currencies against the USD, advanced 0.51% to 103.18.
Although economic growth has lost a notch, it remains above the previous estimate of 2%, with 2.1% in the second quarter. This, along with the US Commerce Department’s assertion that consumer spending is holding steady, up 0.8% in July, could keep the Fed in check. CME’s FedWatch tool, which tracks trader views on rising US borrowing costs, indicates the Fed will keep rates unchanged at the September meeting. However, for November, the odds remain at 44.1% for a 25 basis point increase.
Meanwhile, Atlanta Fed President Raphael Bostic declared the policy adequately tight to bring inflation closer to the 2% target set by the US central bank within a “reasonable” time frame.
On the Japanese front, Bank of Japan (BOJ) policymakers were split between seeking a normalization of monetary policy and continuing stimulus. BoJ board member Toyoaki Nakamura said it is premature to tighten monetary conditions as high import prices have fueled inflation. He added that once the “deflationary mentality” is eradicated, the BOJ will not need Yield Curve Control (YCC).
In data, Japan Retail Sales grew above the 5.4% yoy forecast and rose 6.8% in July, while Industrial Production fell -2.4%, disappointing investors who had expected a -1.4 contraction. %.
USD/JPY Price Analysis: Technical Perspective
The pair remains biased higher despite dipping below the Tenkan-Sen, which has been picked up by buyers early in the session on Thursday. Despite the bulls being in command, USD/JPY needs to break yesterday’s high of 146.53 to pave the way higher, with our sights set on a year-to-date high of 147.37. Otherwise, downside risks emerge below 145.55, which, once broken, the major may dip and test the Aug 23 low at 144.54.
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.
