18 July 2024, USD/JPY
USDJPY:
The USD/JPY pair is attracting sellers near 155.75 on Thursday in the early hours of Asian trading. The pair is declining due to a general weakness in the US dollar (USD) and speculation regarding the Bank of Japan (BoJ) intervention. On Thursday, the US is scheduled to release several key economic indicators, including weekly initial jobless claims and the Philadelphia Fed manufacturing index. Additionally, the Fed's Laurie Logan is set to deliver a speech.
It is thought that Japanese authorities may intervene in the currency market once more in order to support the Japanese Yen (JPY), which is currently at multi-decade lows. This could provide support for the yen in the near term, limiting the pair's upside potential.
The Ministry of Finance released data on Thursday which showed that Japan's trade balance for the year ending in June rose to 224 billion yen from 1220.1 billion yen previously, exceeding expectations. Meanwhile, the country's exports increased by 5.4% in June, compared to 13.5% in May. This figure is below the forecast of 6.4%. Imports increased by 3.2 per cent compared to the previous figure of 9.5 per cent, which was below the market consensus forecast of 9.3 per cent.
In terms of the US dollar, market sentiment suggests that there is little likelihood of a 25 basis point rate cut at the Fed's July meeting. However, the probability of a rate cut in September is estimated to be 100% according to data from the CME FedWatch Tool. The likelihood of a Fed rate cut is increasing, which is exerting downward pressure on the dollar against the yen.
Additionally, dovish Fed rates are further undermining the US dollar in the near term. On Wednesday, Fed chief Christopher Waller stated that the U.S. central bank is "getting closer" to an interest rate cut. Meanwhile, Federal Reserve Bank of Richmond President Thomas Barkin noted that the easing in inflation has begun to widen and expressed his desire for it to continue.
Trade recommendation: Trading predominantly Sell orders from the current price level.
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