USDJPY pair is trading in a tight range between 141.20 and 141.60.
The USDJPY pair is trading in a tight range between 141.20 and 141.60 as the European day begins on Tuesday. The major currency is now trading at 141.45, down 0.01% on the day. Market participants would rather sit out the Federal Reserve’s (Fed). And Bank of Japan’s (BoJ) interest rate announcements later this week.
The preliminary S&P Global US Manufacturing PMI readings for Monday were stronger than expected. The Services PMI fell to 52.4 from 54.4, exceeding market estimates of 46.4 and the prior reading of 46.3 in June. The S&P Global Composite PMI in the United States dipped to 52 from 53.2 in June.
Aside from the mixed US PMI statistic, last week’s data showed that inflationary pressures are lessening. And the labor market remains tight. These findings have fueled speculation that the Fed may cease its tightening monetary policy after the July meeting.
The market expected the Federal Reserve (Fed) to raise interest rates by 25 basis points (bps) to 5.25-5.50%.
The FOMC meeting on Wednesday is largely expected to boost its benchmark rate by another quarter-point. The Fed is largely expected to raise interest rates by 25 basis points (bps) to 5.25-5.50%. However, the news conference held by Fed Chairman Jerome Powell on Wednesday’s announcement will provide some hints regarding the prospect of interest rate guidance for the full year. A hawkish Fed posture might cause the US Dollar to rise versus the Japanese Yen.
Policymakers in Japan are anticipated to retain their dovish approach.
On the other side of the Pacific, the Bank of Japan (BoJ) will publish its monetary policy on Friday. BoJ Governor Kazuo Ueda put a stop to speculation about a Yield Control Curve policy shift. Saying that the 2% inflation objective was still some distance off. These remarks suggest that Japanese authorities would retain a dovish approach. In order to keep inflation over 2%. Furthermore, officials at the Bank of Japan want to wait for further data to verify that wages and inflation continue to grow before changing policy.
The disparity in monetary policy between The Bank of Japan and the Federal Reserve may impose pressure on the Japanese yen versus its major rivals, which might be a headwind for the USDJPY pair. Market players will keep an eye on the FOMC and Bank of Japan meetings, which are planned for Wednesday and Friday, respectively. This significant occurrence has the potential to cause market volatility.
Later in the day, the North American session will see the release of US CB Consumer Confidence. Later this week, the Japanese Tokyo Core CPI YoY, US Advance GDP QoQ, and the Fed’s favorite inflation gauge, the core Personal Consumption Expenditure (PCE) Price Index MoM, will be issued. Traders will look for chances in the USDJPY pair based on data.
