USD/JPY hits new 38-year high at 161.27 | 28 June 2024

Event to pay attention to today:

15:30 GMT+3. USD - United States Core Personal Consumption Expenditures (PCE) Price Index m/m

USDJPY:

The USD/JPY currency pair traded near 161.00, representing the highest level since 1986, during the Asian session on Friday. The Tokyo Consumer Price Index (CPI) saw a year-on-year increase to 2.3% in June, up from the previous period's 2.2%. Core CPI inflation in Tokyo, which excludes volatile food prices, also increased over the same period to 2.1% year-on-year from the previous reading of 1.9%. This exceeded the median market forecast of 2.0% year-on-year.

On Wednesday, Japan's Finance Minister Shunichi Suzuki stated that he would take appropriate action to address excessive currency fluctuations. Mr. Suzuki declined to comment on specific currency levels or potential interventions, but emphasized the importance of stable currency movements that reflect fundamental economic principles. Chief Cabinet Secretary Yoshimasa Hayashi also expressed support for the finance minister's position.

The US dollar (USD) is appreciating due to an increase in US Treasury bond yields. The two-year and ten-year bond yields are currently at 4.72% and 4.30%, respectively. On Thursday, Federal Reserve Board of Governors (Fed) member Michelle Bowman stated that while the Fed's current policy should be sufficient to achieve the inflation target, the Fed should be prepared to cut rates further if inflation data prove unsustainable.

On Friday, the PCE core price index inflation is forecast to fall to an annualised rate of 2.6 per cent from a previous reading of 2.8 per cent. This data is considered the Federal Reserve's (Fed) preferred inflation gauge. Market participants are hopeful that signs of weakening inflation will prompt the Federal Reserve (Fed) to consider cutting rates sooner rather than later.

Trade recommendation: Trading predominantly Buy orders from the current price level.

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