The USDJPY rises from its lowest point in a week and records its first daily gain in three days.
As it follows the recovery in the yields on US Treasury bonds early on Monday. The USDJPY reaffirms its intraday high above 142.00. In doing so, the Yen pair ignores hawkish cues provided by the Summary of Opinions for the July meeting of the Bank of Japan (BoJ). On monetary policy. The US Dollar’s recovery despite the cautious atmosphere before to this week’s. US Consumer Price Index (CPI) and July’s Producer Price Index (PPI).
The achievement of 2% inflation in a sustained and stable way appears to have definitely come into sight. According to one member, according to the BoJ’s Summary of Opinions for the July meeting. Which was published earlier in the day. The news coincides with warnings to adjust Yield Curve Control (YCC) policy cautiously. Which could impact on the JPY in response to hawkish BoJ concerns.
concern related to China and hawkish Yen prices are driven by pre-inflationary moves and the BoJ Summary of Opinions.
Concerns about the Bank of Japan (BoJ) abandoning its record-low interest rate and/or changing the Yield Curve Control (YCC) policy have been raised in the past week. As a result of the BoJ’s two unscheduled bond-buying programs. And the decision-makers’ defenses of the easy-money policy.
In a complete release of its quarterly outlook report, Bank of Japan (BoJ) noted. That Japan’s core consumer. As the year comes to a close, inflation is projected to progressively decrease. Before the 10-year yield reached 1.0% and supported the Japanese Yen USDJPY. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida hinted to the Japanese central bank’s involvement. The policymaker added, “There is a potential BoJ’s approach might change if economic and price conditions change from now.
The greatest daily decline in three months is being consolidated in US 10-year Treasury note yields.
The US Dollar Index (DXY), however, was able to break a two-day downtrend with modest advances near 102.10. Which helped the Yen pair post its first daily gain in three days and put it back on the bull’s radar. The US credit rating drop also increased demand for the Greenback as a safe haven and helped the USDJPY bulls.
It’s important to note that the DXY increased for three weeks in a row before declining amid mixed economic data. In spite of this, the US employment report showed a lower-than-anticipated Nonfarm Payrolls (NFP) total of 187K, compared to 200K market estimates. And 185K prior (revised) readings. But the Unemployment Rate decreased to 3.5% from previous and projected readings of 3.6%. Additionally, the Average Hourly Earnings surpassed forecasts for a minor slowdown in wage growth by printing 0.4% MoM and 4.4% YoY data.
In other news, Michelle Bowman, the governor of the Federal Reserve, made hawkish remarks that may have recently caused the USDJPY to recover. She said that the Fed should continue to be prepared to raise the federal funds rate. At a future meeting if the incoming data show that progress on inflation has stalled.
Raphael Bostic, president of the Atlanta Federal Reserve Bank, had told Bloomberg on Friday that the central bankis anticipated to maintain restrictive monetary policy long into 2024. Austan Goolsbee, President of the Chicago Fed, on the other hand, said that they should begin debating how long to hold rates.
In order to have a clear direction going forward, USDJPY traders should look for fresh hints concerning the BoJ’s withdrawal from the ultra-easy monetary policy. The US inflation figures for this week will be crucial to observe as the Fed’s September rate hike approaches.
Technical Outlook
Although the 21-day Exponential Moving Average (EMA) prevents the USDJPY from falling further immediately near 141.50, bearish oscillators team up with a six-week-old horizontal resistance region between 143.90-144.00 to thwart the Yen pair’s recovery.
