- USD/JPY remains in a tight range as traders prepare for the August NFPs in the US.
- The US ADP employment change disappointed, but the Chicago PMI beat estimates.
- The Bank of Japan will carry out 10-year JGB note buying operations in September, further confirming its dovish stance.
The USD/JPY is unable to reach a new all-time high, amid disappointing sentiment, with US data led by the ADP report below estimates, while the Chicago PMI beat estimates. Today’s data, coupled with Tuesday’s JOLT report and consumer sentiment, warrant further tightening by the Fed.
USD/JPY opened near daily highs around 138.80 and posted a daily low at 138.26. However, buyers stepped in and lifted the major currency to its daily high at 138.90 before pulling back towards current exchange rates. At the time of writing, USD/JPY is trading at 138.62.
USD/JPY unaffected by lack of catalysts
The US ADP report for August showed that private hiring increased by 132,000, down from 270,000 jobs the previous month. It should be noted that this is the first release under a new survey format, so it should not be seen as a prelude to Friday’s Non-Farm Payrolls report. According to Nela Richardson, chief economist at ADP, “our data suggests a recent shift to a more conservative hiring pace,” companies are at a tipping point. She added that hiring could shift from “supercharged job gains” to a more regular cycle.
Later, the Chicago PMI for August rose more than estimated, topping 52.2 vs. 52 expected by analysts.
Earlier, Cleveland Fed President Loretta Mester crossed paths with the press and reiterated her view that the Federal Funds Rate (FFR) will be above 4% in 2023 and “stay there.” She commented that she does not “foresee the Fed cutting FFR next year.”
Meanwhile, the dollar index falls 0.25% to 108.547, while the US 10-year Treasury yield is unchanged at 3.106%, a headwind for the USD/JPY.
On the other hand, during the Asian session, Japanese retail sales beat estimates in July, as did consumer and industrial production. Meanwhile, the Bank of Japan (BoJ) announced that it would purchase 10-year JGB notes, committing to its ultra-loose monetary policy stance.
Key USD/JPY Technical Levels
Source: Fx Street
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