05 Junio 2024, USD/JPY
An event to look out for today:
17:00 GMT+3. USD - ISM Index of Business Activity in the Services Sector
USDJPY:
The Japanese yen (JPY) is declining on Wednesday due to investor caution ahead of key US data releases, including ADP Employment Change and ISM Services PMI reports. Investor attention is expected to shift to the Non-Farm Payrolls (NFP) report, which will be released on Friday.
The Yen may face further downward pressure due to the interest rate differential between the US and Japan, which supports the USD/JPY pair. However, the upside potential of the USD/JPY pair may be limited by better than expected data from Japan released on Wednesday.
The Jibun Bank Japan Services PMI was revised upward to 53.8 in May from the previous reading of 53.6. Despite the upward revision, the index fell short of April's 8-month high of 54.3, indicating the lowest growth in the services sector since February. In addition, workers' cash income rose at a 2.1% annualized rate in April, exceeding forecasts for a 1.7% increase. This latest figure was also the highest since last June.
The U.S. Dollar Index (DXY), which measures the value of the U.S. dollar against six other major currencies, rose thanks to higher U.S. Treasury yields. However, a weak US manufacturing PMI for May raised the likelihood that the US Federal Reserve (Fed) will make its first rate cut in September. According to the CME FedWatch Tool, the probability of a 25 basis point Fed rate cut is 64.9%, up from 46.3% a week earlier.
Trading recommendation: Trade mainly with buy orders at the price level of 156.00. We consider sell orders at the price level of 155.20.
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