USDJPY pair is consolidating its losses ahead of critical US data.
During the Asian session on Tuesday, the USDJPY pair consolidates its recent losses. The pair has pared losses after falling about 70 pips late Monday on rumors over a possible intervention in FX markets by Japanese authorities. The USDJPY is presently trading at 151.72, up 0.05% for the day.
Janet Yellen, the US Treasury Secretary, stated on Tuesday that she disagrees with Moody’s decision to downgrade the US rating, but adds that she remains confidence in the US economy and Treasuries as a safe-haven asset.
According to Fed officials, additional tightening will be dependent on data. On Tuesday, investors will be looking for clues from US inflation statistics. The headline Consumer Price Index (CPI) in the United States is predicted to rise 0.1% month on month in October, while core inflation is expected to remain at 0.3 MoM and 4.1% year on year. Furthermore, according to the New York Fed’s poll of consumer expectations, one-year and five-year inflation estimates have softened to 3.57% and 2.72%, respectively.
The New York Fed reduced its one-year and five-year inflation forecasts to 3.57% and 2.72%, respectively.
The stronger inflation figures may persuade the Fed to boost interest rates further at its December or January meeting in order to pull the unemployment rate down. Inflation has returned to goal. As a result, the US Dollar (USD) may rise, acting as a tailwind for the USDJPY pair.
Japanese Finance Minister Suzuki and Deputy Governor of the Bank of Japan (BoJ) Shinichi Uchida both refused to comment on currency levels.
On the Japanese Yen, Japanese Finance Minister Sunichi Suzuki intervened verbally on Monday, stating that it is critical for currencies to move steadily and represent fundamentals, and that Japan will continue to take all necessary steps on FX swings. Both Japanese Finance Minister Suzuki and Bank of Japan (BoJ) Deputy Governor Shinichi Uchida, however, refused to comment on currency levels.
Aside from that, Kazuhiro Masaki, director-general of the Bank of Japan’s monetary affairs department, stated that even if long-term interest rates rise, the BOJ does not expect the 10-year yield would significantly exceed 1%.
Traders will be looking at US inflation data before Japan’s growth figures on Wednesday.
Market participants will concentrate their efforts in the United States. The Consumer Price Index (CPI) will be released later on Tuesday. On Wednesday, the focus will shift to the preliminary Japan Gross Domestic Product (GDP) for the third quarter (Q3). These occurrences could give the USD/JPY pair a clear direction.
