16 July 2024, USD/JPY
Event to pay attention to today:
15:30 GMT+3. USD - Retail Sales
USDJPY:
The USD/JPY currency pair is trading at a stronger level around 158.30 on Tuesday in the early hours of Asian trading. The increase in the value of the pair is being driven by a moderate rebound in the US dollar (USD). Investors will be monitoring the US retail sales data for June and the speech by Federal Reserve (Fed) Governor Adriana Kugler.
On Monday, Fed Chairman Jerome Powell stated that three measures of US inflation this year "provide some reassurance" that inflation is on track to reach the Fed's target in a sustainable manner. This suggests that a move to lower interest rates may be imminent. Bank of San Francisco President Mary Daly stated that inflation is cooling, reinforcing confidence that it is on track to reach 2% as anticipated. However, Ms. Daly stated that additional information is required to make an informed decision regarding interest rates.
The possibility of a reduction in US borrowing costs is leading to growing speculation that this could have an adverse effect on the US dollar in the near term. CME's FedWatch tool indicates that the market is currently pricing in a 100% probability of a 25-basis-point cut to the Fed funds rate at the Federal Open Market Committee (FOMC) meeting in September.
The potential for currency intervention by the Japanese authorities may provide some support to the Japanese Yen (JPY). On Friday, Japan's Finance Minister Shunichi Suzuki emphasised that rapid currency fluctuations are undesirable. Meanwhile, Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated that he is "ready to take all possible measures in the forex market".
Trade recommendation: Trading predominantly Sell orders from the current price level.
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