20 May 2024, USD/JPY
USDJPY:
The Dollar-Yen pair traded in positive territory for the third consecutive day around 155.80 during the early Asian session on Monday. The pair's decline is supported by weak Japanese first quarter (Q1) GDP data. Later in the day, Fed officials Bostic, Barr, Waller, Jefferson and Mester are scheduled to speak. The minutes of the FOMC meeting will be released on Wednesday. On Friday, Japan's national consumer price index (CPI) will take center stage.
Atlanta Fed President Raphael Bostic said Friday that he saw signs of inflation cooling in the recent CPI report, but prefers to keep an eye on the May and June data to make sure inflation doesn't turn the other way. Meanwhile, Richmond Fed President Tom Barkin said the central bank needs to keep borrowing costs high for longer to keep inflation on target.
The large interest rate differential between the U.S. and Japan is putting pressure on the Japanese yen (JPY) and boosting the USD/JPY exchange rate. In March, the Bank of Japan abandoned the world's only negative interest rate policy. It emphasized that financial conditions will remain easy and interest rates will slowly rise. Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, also noted that investors are awaiting second-quarter GDP data for more catalysts.
Trading recommendation: Trade predominantly with Sell orders from the current price level.
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