- USD/JPY trades sideways near 158.00 as investors look for fresh cues on the Fed’s rate-cut timeframe.
- US Retail Sales barely grew in May against expectations of 0.2%.
- The BoJ minutes for the June meeting showed that policymakers discussed hiking interest rates sooner.
The USD/JPY pair trades close to seven-week high near 158.00 in Wednesday’s European session. The rally appears to have paused for the time-being amid uncertainty over Federal Reserve’s (Fed) interest rate path and the release of the Japan’s National Consumer Price Index (CPI) data for May, which will be published on Friday.
Market sentiment remains positive for risk-perceived assets amid growing speculation that the Fed will start reducing interest rates from the September meeting. S&P 500 futures have posted some gains in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges down to 105.15.
Market expectations for the Fed to begin reducing interest rates from the September meeting strengthen after the United States (US) Retail Sales data for May missed estimates. Monthly Retail Sales grew by 0.1%, slower than expectations of 0.2%. The Retail Sales report also showed that households cut discretionary spending, which indicates weak purchasing power due to high inflation interest rates.
Meanwhile, investors also expect that the Fed will reduce interest rates twice this year against one projected by policymakers in their latest dot plot. However, officials emphasize keeping interest rates at their current levels until they get see good inflation data for months.
On the Tokyo front, the Japanese Yen weakens even though Bank of Japan (BoJ) minutes for the June meeting showed that Governor Kazuo Ueda advocated for increasing interest rates sooner than expected. BoJ Ueda favors tightening the policy further due to upside risks to inflation prompted by the weak Yen. Japan’s exports have become competitive in global markets and cost of imposts have risen, which could push price pressures higher.
This week, the major trigger for the Japanese Yen will be the National CPI data. Annual National CPI excluding Fresh Food is expected to have accelerated to 2.6% from the prior reading of 2.2%.
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
AUD/USD: No changes to the range bound theme
Once again, AUD/USD navigated a vacillating session and ended around the 06650 zone despite the corrective retracement in the Greenback ahead of the release of key US PCE data.
EUR/USD: Bulls remained unconvinced
EUR/USD set aside part of the recent bearishness and revisited the area above the 1.0700 barrier, although that bullish attempt appears to have lacked conviction in spite of the broad-based correction in the US Dollar.
Gold back to its comfort zone around $2,330
Gold bounces off the psychologically important $2,300 level and trades above $2,320 on Thursday. The benchmark 10-year US Treasury bond yield stays in negative territory following latest US data, allowing XAU/USD to extend its rebound.
Ethereum on-chain metrics point to potential rally
Ethereum (ETH) is up nearly 3% on Thursday as upcoming spot ETH ETF launch and key on-chain metrics suggest an ETH rally might be around the corner.
The Federal Reserve is bleeding red ink and you're on the hook
The Federal Reserve is losing over $1 billion every week and you're on the hook. Since September 2022, the central bank has reported losses of around $176.4 billion.