USDJPY: BUY 144.20, SL 144.00, TP 145.00 | 02 May 2025

An event to pay attention to today:

09:30 EET. JPY - Bank of Japan Press Conference

15:30 EET. USD - US Initial Jobless Claims Number

17:00 EET. USD - US ISM Manufacturing Index

USDJPY:

The USD/JPY pair is trading with small losses, hovering around the mid-143.00s after disappointing US economic growth data and weak Japanese economic reports caused a divergence in sentiment between the two currencies. The US economy contracted 0.3 per cent in the first quarter of 2025, the first contraction since 2022, missing growth expectations and highlighting the impact of rising imports and government spending cuts. At the same time, Japan released weaker-than-expected industrial production and retail sales data, limiting the yen's gains even as global risk appetite declined.

On the macroeconomic front, the US Bureau of Economic Analysis reported that real GDP contracted 0.3% in Q1, missing the market forecast for a 0.4% increase and slowing sharply from the 2.4% growth in Q4 2024. The contraction was primarily driven by a 41 per cent rise in imports and lower government spending. Meanwhile, core PCE inflation, the Fed's preferred measure of inflation, fell to 2.3 per cent year-on-year, in line with expectations and below February's 2.5 per cent. Other data showed a slowdown in job creation, with the ADP report showing just 62,000 new jobs in April against expectations of 108,000.

Despite the softer data, personal spending remained flat in March, rising 0.7%, while incomes rose 0.5%. However, market sentiment turned cautious, with the Dow Jones Industrial Average falling more than 200 points to stagnate around 40,300.

In Japan, the yen weakened 0.5% against the dollar as industrial production and retail sales data disappointed, highlighting the fragility of the domestic economy.

Trade recommendation: BUY 144.20, SL 144.00, TP 145.00

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