- USD / JPY investors will look for a boost from Japan’s national CPI data on Thursday.
- The US dollar remains bullish, economic data released on Tuesday beat expectations.
- USD / JPY strengthens on a positive outlook, pointing towards higher resistance at 115.00.
The pair USD / JPY is consolidating just below the 115.00 level, at levels not seen since March 2017. At the time of writing, the pair is trading at 114.88, up 0.05% on the day, after having peaked at 114.97 during today’s Asian session. Combining higher US bond yields, rising stock prices and a rally in the US dollar Across the board they helped the pair to continue to gain ground on the upside.
At this point, if the pair can break the nearby resistance at 115.00, there is really no significant resistance on the daily chart. up to December 2016 high around 118.65.
In addition, the positive total of the merchandise trade balance (October), released by the Japanese Ministry of Finance on Tuesday, shows a trade surplus of 67.4 billion yen ($ 586.60 million). However, a Reuters report suggests that Japan’s export growth broke a 7-month double-digit expansion in October, led by a decline in auto shipments to the United States and China.
A slowdown in shipments highlights the risks to the Japanese economy, which is highly dependent on exports and trade surplus, on global supply constraints. Any fluctuation in exports will displace investors from other safe havens, directly affecting the value of the pair.
In addition, investors are waiting for the Japanese fiscal stimulus package for COVID-19, valued at a few trillion yen, likely to be announced by the end of the week. The stimulus package aims to revive the Japanese economy, which experienced a decline in consumption in the third quarter.
The US dollar has proven stronger lately compared to the Japanese currency, especially after better than expected retail sales data released by the US. Last week’s US inflation data rose and showed consumer prices rose at their highest rate since 1990. Investors now expect the Federal Reserve to accelerate the taper. Some experts even hope that the Fed could possibly raise interest rates earlier than expected initially.
On Tuesday, data showed that American consumers looked beyond rising prices and drove higher retail sales by 1.7% in October, exceeding expectations for a 1.4% increase. Additionally, US industrial production rose 1.6% in October, a positive surprise.
It should be noted that two regional heads of the Federal Reserve on Tuesday disagreed on the inflation outlook and what it could mean for the central bank’s interest rate policy.
The President of the Federal Reserve Bank of St. Louis, James Bullard said the US central bank needs to move harder to face high levels of inflation. For her part, the leader of the San Francisco Fed, Mary Daly, stressed that moves to reduce price pressures prematurely could cause unnecessary pain later if those pressures weaken.
Investors will keep a close eye on various speeches by the US Fed on Wednesday and Japan’s national consumer price index on Thursday to find momentum.
USD / JPY technical levels
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