- USD/JPY bulls turn cautious near a one-and-half-month peak amid mixed fundamental cues.
- The BoJ’s cautious approach and the upbeat market mood undermine the safe-haven JPY.
- Fed rate-cut uncertainty keeps the USD bulls on the defensive and cap gains for the major.
The USD/JPY pair consolidates around the 158.00 round figure during the Asian session on Thursday and remains well within the striking distance of its highest level since late April touched last week. The mixed fundamental backdrop, meanwhile, warrants some caution before positioning for an extension of the recent appreciating move witnessed over the past two weeks or so.
The Japanese Yen (JPY) is undermined by the Bank of Japan's (BoJ) decision to hold off on any discussions around JGB tapering until the next meeting. Apart from this, the underlying bullish tone across the global equity markets is seen denting demand for the safe-haven JPY and lending support to the USD/JPY pair. However, speculations that Japanese authorities might intervene to prop up the domestic currency, along with persistent geopolitical tensions and political uncertainty in Europe, should limit any meaningful downside for the JPY.
Furthermore, the BoJ Governor Kazuo Ueda's hawkish remarks earlier this week, saying that the central bank could raise rates in July depending on economic data, might hold back the JPY bears from placing aggressive bets. Meanwhile, the US Dollar (USD) continues with its struggle to attract any meaningful buyers and languishes near the weekly low amid expectations that the Federal Reserve (Fed) will cut interest rates twice this year, bolstered by signs that inflation is subsiding. This might contribute to keeping a lid on the USD/JPY pair.
Market participants now look to Thursday's US economic docket, featuring the release of the usual Initial Jobless Claims, the Philly Fed Manufacturing Index and housing market data – Building Permits and Housing Starts. This, along with the US bond yields and Fedspeak, will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities ahead of the Japan National Core CPI and the global flash PMI prints on Friday.
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.