USDJPY maintains intraday high while continuing week-start rally.
USDJPY is in the lead for the second day in a row, with bids pushing it to a new intraday high near 143.40 early Tuesday. In doing so, the Yen pair validates the market’s most recent dovish fears about the Bank of Japan (BoJ). Which are supported by disappointing Japan real wage data for June.
The risk-barometer pair ignores slow yields as the US Dollar extends its comeback from the previous day. Despite cautious optimism in the markets. Japan’s labor cash earnings were higher than expected in June. But real wages were low enough to justify the BoJ’s dovish stance. Nonetheless, Japan’s inflation-adjusted real wages fell for the 15th straight month in June, to 1.6% YoY from 0.9% the previous month.
The BoJ Summary of Opinions was mixed; yields also struggled during the weak session.
According to the Bank of Japan’s (BoJ) Summary of Opinions for the July meeting. One member stated that achieving 2% inflation in a sustained and stable manner appears to be plainly in sight. The news joins signs that the Yield Curve Control (YCC) policy will be tweaked with greater caution. Weighing on the JPY amid dovish BoJ fears.
USDJPY stays at the forefront. The Yen pair justifies the market’s latest dovish concerns about the Bank of Japan (BoJ). Backed by downbeat Japanese real wage data for June. As it takes the bids to refresh intraday high near 143.40 during early Tuesday. With this, the risk-barometer pair ignores sluggish yields as the US Dollar extends the previous day’s recovery. Amid cautious optimism in the markets. Japan’s Labor Cash Earnings came in better-than-forecast. One participant in the July meeting stated that it appeared to be clearly in reach to attain 2% inflation in a sustainable and consistent way. In light of the dovish BoJ concerns. The announcement coincides with hints that the Yield Curve Control (YCC) policy will be adjusted with more caution.
Despite ambiguous Fed conversations ahead of US inflation, the US dollar stays solid.
Despite the negative sentiment, the US Dollar Index (DXY) continues to extend its week-start bounce above 102.00. Nonetheless, by press time, US 10-year and two-year Treasury bond yields were hovering around 4.06% and 4.76%, respectively.
Following the release of an unsatisfactory US jobs report, Fed Governor Michelle Bowman stated that more rate rises are likely to be required to bring inflation back to target. On the contrary, New York Fed President John C. Williams stated that interest rates may begin to fall next year. The Fed’s Williams also expressed hope for a little higher unemployment rate as the economy cooled.
It should be mentioned that the Eurozone and China’s bearish attitude also supports the US Dollar and propels the USDJPY pair during a lethargic session ahead of Chinese and US trade balance data.
However, despite negative yield expectations, the US Dollar Index (DXY) continues to rise above 102.00. However, as of the time of publication, the US 10-year and 2-year Treasury bond yields were under pressure at 4.06% and 4.76%, respectively.
Fed Governor Michelle Bowman stated that additional rate rises will probably be required to bring inflation back to goal after seeing a dismal US jobs report. President of the New York Fed John C. Williams stated that he anticipates interest rates starting to decline in 2019. Williams of the Fed also expressed optimism for a little higher unemployment rate if the economy contracted.
It should be mentioned that in a lethargic session ahead of Chinese and US trade balance data, the US Dollar is supported by the Eurozone and China’s gloomy sentiment, which also drives the USDJPY pair higher.
Technical Outlook
For the USDJPY bulls to maintain control, a daily closing above the falling resistance line that has been in place for five weeks—roughly 143.20 at the time of press—becomes necessary.
