USDJPY faces new supply and is under pressure from a number of sources.
The USDJPY pair faces selling pressure during the Asian session on Thursday. Snapping a two-day winning streak to the weekly high. Which was reached the previous day in the 147.75 range. Spot prices have fallen to 147.00. A new daily low in the previous hour, with bears now looking for a sustained break and acceptance below the 200-hour Simple Moving Average. Before preparing for any more losses.
Bets about the Bank of Japan ending its ultra-easy monetary policy support the USDJPY and weigh on the pair.
The Japanese Yen (USDJPY) is supported by expectations. That the Bank of Japan (BoJ) would stop its ultra-easy monetary policy. Which is a significant factor weighing on the USDJPY pair. Indeed, markets are already speculating that the central bank would abandon its yield-curve control (YCC) strategy and terminate negative interest rates as early as this year. After the weekend comments of BoJ Governor Kazuo Ueda.
In an interview with the Yomiuri newspaper, Ueda said that raising interest rates is one of the alternatives open. If the Bank of Japan gets satisfied that prices and wages would continue to rise sustainably. As a result, Japanese government bonds began to fall in value. (JGB) and raised the yield on the benchmark 10-year JGB to its highest level since January 2014 on Tuesday, maintaining the JPY’s tailwind.
Uncertainty over the Fed’s rate-hike path causes USD selling and leads to the fall.
Aside from that, the advent of some US Dollar (USD) selling on uncertainty about the Federal Reserve’s (Fed) future rate-hike path adds to the offered tone around the USDJPY pair. The US consumer inflation data reported on Wednesday confirmed that the Fed will maintain interest rates at their current levels at its policy meeting next week. However, the still-sticky inflation keeps expectations alive for one more lift-off before the end of the year.
According to current market pricing, there is a greater than 50% possibility of a 25 basis point (bps) lift-off in either November or December. This, in turn, might be true. Support the USD bears in their aggressive bearish positioning. And aid limit losses for the USDJPY pair. Traders are now looking for a new impetus in the US data calendar. Which includes the typical Weekly Initial Jobless Claims, Producer Price Index (PPI), and monthly Retail Sales.
