- The Japanese Yen gains ground after the release of the Tokyo CPI data on Friday.
- The JPY’s downside may be limited as traders may continue unwinding their carry trades ahead of the BoJ meeting.
- The US Dollar may limit its downside as recent US economic data have reduced rate cut expectations for September.
The Japanese Yen (JPY) edges higher after the Statistics Bureau of Japan released the Tokyo Consumer Price Index (CPI) data on Friday. The JPY receives support as traders potentially unwind their carry trades ahead of the Bank of Japan's two-day policy meeting, concluding on Wednesday. During the meeting, the board will discuss the possibility of raising interest rates and outline details on tapering its extensive bond purchases.
Japan's top currency diplomat, Masato Kanda, informed the G20 on Friday that foreign exchange (FX) volatility negatively impacts the Japanese economy. Kanda noted an increasing likelihood of a soft landing and emphasized the need to monitor the economy and implement necessary measures closely, according to Reuters.
The US Dollar may receive support as stronger US economic data have reduced some rate cut expectations for September. On Friday, attention will be on the release of the Personal Consumption Expenditures (PCE) Price Index for June.
On Thursday, the US Gross Domestic Product (GDP) for the second quarter (Q2) was stronger than expected. This follows Wednesday’s US PMI data, which indicated a faster expansion in private-sector activity for July, highlighting the resilience of US growth despite elevated interest rates.
Daily Digest Market Movers: Japanese Yen improves after the inflation data
- The headline Tokyo CPI for July increased by 2.2% year-over-year, slightly down from the previous 2.3% rise. The Tokyo CPI excluding Fresh Food and Energy went up by 1.5% YoY, compared to the earlier increase of 1.8%. Moreover, the CPI excluding Fresh Food also rose by 2.2% in July, matching market expectations.
- Bank of America indicates that strong economic growth in the United States allows the Federal Open Market Committee (FOMC) to "afford to wait" before making any changes. The bank states that the economy "remains on robust footing" and continues to expect the Fed to start cutting rates in December.
- According to CME Group’s FedWatch Tool, markets now indicate an 88.6% probability of a 25-basis point rate cut at the September Fed meeting, down from 94.0% a week earlier.
- On Thursday, the US GDP grew at an annualized rate of 2.8%, adjusted for seasonality and inflation, up from the previous reading of 1.4% and surpassing forecasts of 2%. Additionally, Initial Jobless Claims fell to 235K in the week ending July 19, compared to the previous reading of 243K and the expected 238K.
- On Wednesday, Japanese Finance Minister Shunichi Suzuki, Chief Cabinet Secretary Yoshimasa Hayashi, and top currency diplomat Masato Kanda avoided commenting on foreign exchange matters, according to Reuters.
- The Japanese Cabinet Office kept its economic assessment unchanged for July but cautioned about a bleak outlook, noted in its monthly report on Thursday. The government also downgraded its evaluation of exports, indicating that they are stagnating.
- The BlackRock Investment Institute noted in its mid-year outlook that Japan’s economic recovery and rising inflation make its equity market one of its strongest convictions. The firm anticipates that the Bank of Japan will not raise interest rates at next week's meeting.
- Reuters reported on Monday that a senior official in the ruling party, Toshimitsu Motegi urged the Bank of Japan (BoJ) to more clearly communicate its plan to normalize monetary policy through gradual interest rate hikes, according to Reuters. Prime Minister Fumio Kishida added that normalizing the central bank’s monetary policy would support Japan's transition to a growth-driven economy.
- JP Morgan has anticipated no rate hike from the Bank of Japan (BoJ) in July or at any point in 2024. A July rate increase is not their base case, and they do not expect any hikes for the remainder of 2024. They believe it is too early to adopt a bullish stance on the Yen.
Technical Analysis: USD/JPY hovers around 154.00
USD/JPY trades around 154.00 on Friday. The daily chart analysis shows that the USD/JPY pair has returned to the descending channel, indicating the weakening of a bearish bias. However, the 14-day Relative Strength Index (RSI) is positioned at the level of 30, indicating an oversold situation and a potential short-term rebound.
The USD/JPY pair may test the lower boundary of the descending channel around the level of 153.50, followed by May's low of 151.86 level. Further support could be found at the psychological level of 151.00.
On the upside, the USD/JPY pair may test the “throwback support level turned resistance” around the 154.50 level. Further resistance appears at the nine-day Exponential Moving Average (EMA) of 155.80, followed by the upper boundary of the descending channel around 156.60.
USD/JPY: Daily Chart
Japanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.11% | -0.22% | -0.10% | -0.23% | -0.08% | -0.09% | |
| EUR | 0.11% | 0.00% | -0.08% | 0.02% | -0.11% | 0.06% | 0.03% | |
| GBP | 0.11% | -0.01% | -0.10% | 0.02% | -0.13% | 0.04% | 0.01% | |
| JPY | 0.22% | 0.08% | 0.10% | 0.10% | -0.01% | 0.14% | 0.13% | |
| CAD | 0.10% | -0.02% | -0.02% | -0.10% | -0.14% | 0.02% | 0.00% | |
| AUD | 0.23% | 0.11% | 0.13% | 0.00% | 0.14% | 0.17% | 0.17% | |
| NZD | 0.08% | -0.06% | -0.04% | -0.14% | -0.02% | -0.17% | -0.03% | |
| CHF | 0.09% | -0.03% | -0.01% | -0.13% | -0.00% | -0.17% | 0.03% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Jul 26, 2024 12:30
Frequency: Monthly
Consensus: 2.5%
Previous: 2.6%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds higher ground above 1.0850 ahead of US PCE inflation
EUR/USD is gaining recovery momentum above 1.0850 in the early European session on Friday. The pair stays underpinned by the renewed US Dollar weakness, as risk sentiment rebounds ahead of the key US PCE inflation data.
GBP/USD rebounds above 1.2850 ahead of US PCE data
The GBP/USD pair gains traction near 1.2860 amid the weaker Greenback, snapping the three-day losing streak during the Asian trading hours on Friday. However, the potential upside of the major pair seems limited as market players expect the Bank of England to cut interest rates in August.
Gold price moves away from two-week low amid modest USD weakness, ahead of US PCE data
Gold price dived to over a two-week low following the release of the US macro data on Thursday. September Fed rate cut bets keep the USD bulls on the defensive and help to limit any further losses. Traders now look to the US PCE Price Index data before positioning for a firm near-term direction.
Bitcoin retests its key support level around $62,000
Bitcoin and Ethereum are currently retesting key support levels around $62,700 and $3,000, respectively, suggesting a potential for recovery, while Ripple is finding resistance at $0.640, and a breakout above this level could signal a bullish move in the near future.
Will financial markets get some relief as the week closes out?
There’s been no let-up in global growth worries this week and risk off price action has intensified as best reflected through more weakness in US equities. The latest concerns come from discouraging US earnings, ineffective China monetary policy easing efforts, and distressing data out of the Eurozone and UK.