Japanese Yen slides to multi-day low against USD ahead of US data, FOMC minutes
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- The Japanese Yen trades with a mild negative bias for the second straight day on Wednesday.
- Bets for a hawkish BoJ policy shift and the cautious mood to limit losses for the safe-haven JPY.
- Subdued USD price action could further cap USD/JPY ahead of US data and FOMC minutes.
The Japanese Yen (JPY) adds to the overnight losses and continues losing ground for the second successive day on Wednesday, pushing the USD/JPY pair closer to mid-142.00s, or a multi-day top during the early European session. The market sentiment, meanwhile, remains fragile in the wake of weak economic data from China and a devastating earthquake in Japan, albeit fails to lend any support to the safe-haven JPY. That said, the anticipation of a reversal in policy divergence between the Bank of Japan (BoJ) and the Federal Reserve (Fed) in 2024 should help limit losses for the JPY.
In fact, the BoJ is anticipated to abandon its ultra-loose monetary policy settings, while the US central bank is expected to deliver a series of interest rate cuts throughout the year. This, in turn, could act as a headwind for the USD/JPY pair. Traders might also refrain from placing aggressive directional bets amid doubts over the possibility of early interest rate cuts by the US central bank. Hence, the focus will remain glued to the FOMC meeting minutes, which will be scrutinized for cues about the Fed's future policy move and determine the next leg of a directional move for the Greenback.
Investors on Wednesday will also confront the release of the US ISM Manufacturing PMI and JOLTS Job Openings data, which should further contribute to producing trading opportunities around the USD/JPY pair. Nevertheless, the aforementioned fundamental backdrop seems tilted in favour of the JPY bulls and warrants some caution before positioning for an extension of the currency pair's recent recovery from the 140.25 area, or the lowest level since July 28 touched last week.
Daily Digest Market Movers: Japanese Yen remains depressed against USD, focus remains on FOMC minuets
- The initial market reaction to a 7.6 magnitude earthquake in Japan on Monday fades rather quickly amid expectations of a hawkish shift in the Bank of Japan's policy stance.
- The BoJ is anticipated to exit its ultra-loose policy in April, after the annual wage negotiations in March, though the possibility of such a move in January cannot be ruled out.
- Meanwhile, the Federal Reserve is widely expected to start cutting interest rates as early as March and deliver 150 basis points (bps) of cumulative rate cuts by the year-end.
- The overnight sharp move up in the US Treasury bond yields, however, reflected doubts that the Fed will deliver the extent of monetary easing that is priced in the markets.
- The yield on the benchmark 10-year US government bond rose above 4.0% for the first time in two weeks on Tuesday and provided a strong boost to the US Dollar.
- Rising US bond yields weighed on growth stocks and triggered a corrective decline in the US equity markets, benefitting the safe-haven JPY and capping the USD/JPY pair.
- Traders now look to the US ISM Manufacturing PMI and JOLTS Job Openings data ahead of the FOMC minutes, which will be scrutinized to ascertain the timing of potential rate cuts.
- The market attention will then shift to the ADP's US private-sector employment report on Thursday, though the focus remains on the crucial Nonfarm Payrolls (NFP) on Friday.
Technical Analysis: USD/JPY bulls might now aim to challenge 200-day SMA support breakpoint near 143.00
From a technical perspective, a move beyond the 142.00 round figure might have set the stage for further gains, albeit bearish oscillators on the daily chart warrant caution for bullish traders. Hence, any subsequent move up is more likely to attract fresh sellers near the 142.40 region and remain capped near the very important 200-day Simple Moving Average (SMA) support breakpoint, currently around the 143.00 mark.
On the flip side, the 141.55 zone now seems to protect the immediate downside, below which the USD/JPY pair could slide back to the 141.00 round figure. Some follow-through selling will expose the multi-month low, around the 140.25 area touched last week, and the 140.00 psychological mark. The latter should act as a key pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders. Spot prices might then accelerate the fall towards the 139.35 region en route to the 139.00 mark, the 138.75 area and the 138.00 mark (July 28 low).
Japanese Yen price today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.13% | -0.10% | 0.02% | 0.02% | -0.07% | -0.32% | -0.03% | |
| EUR | 0.13% | 0.02% | 0.15% | 0.14% | 0.06% | -0.21% | 0.10% | |
| GBP | 0.10% | -0.03% | 0.12% | 0.12% | 0.02% | -0.23% | 0.06% | |
| CAD | -0.03% | -0.15% | -0.13% | -0.02% | -0.09% | -0.36% | -0.05% | |
| AUD | -0.03% | -0.13% | -0.13% | 0.00% | -0.09% | -0.36% | -0.05% | |
| JPY | 0.07% | -0.07% | -0.04% | 0.10% | 0.11% | -0.28% | 0.06% | |
| NZD | 0.32% | 0.22% | 0.24% | 0.37% | 0.37% | 0.26% | 0.32% | |
| CHF | 0.03% | -0.09% | -0.09% | 0.04% | 0.04% | -0.06% | -0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Economic Indicator
United States FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Read more.Why it matters to traders
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
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