15 August 2024, USD/JPY
An event to look out for today:
15:30 GMT+3. USD - Change in retail trade volume
USDJPY:
Uncertainty over the likely timing of the Bank of Japan's (BoJ) next interest rate hike has kept traders away from aggressive bets and resulted in the USD/JPY pair being range-bound. In fact, the Japanese central bank raised its key interest rate to 0.25%, the highest since 2008, at the end of its July meeting and outlined a plan to scale back its bond buying program.
In addition, BOJ Governor Kazuo Ueda said the central bank will continue to raise rates and adjust the degree of easing if the current economic and price outlook is realized. This view was supported in the summary of opinions from the Bank of Japan's July meeting. At the same time, Bank of Japan Deputy Governor Shin'ichi Uchida reduced the chances of a rate hike soon amid recent volatility in financial markets.
In addition, the overall positive risk-off tone is undermining demand for safe-haven yen and continues to provide some support to the USD/JPY pair. However, gains remain limited due to bets on a larger interest rate cut by the Federal Reserve (Fed) backed by signs of easing inflationary pressures in the US, which keeps USD bulls on the defensive and acts as a headwind.
Moving forward, investors are now looking forward to the release of US economic indicators: monthly retail sales data, the usual weekly initial jobless claims, the Empire State manufacturing activity index and the Philly Fed manufacturing activity index. In addition, US bond yields will weigh on the dollar, which, along with broader risk sentiment, should provide some impetus to the USD/JPY pair.
Trading recommendation: Trade predominantly with Buy orders from the current price level
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