- USD/JPY retraces its recent gains on subdued the US Dollar.
- The better-than-expected Machinery Orders showed improved business confidence in Japan’s manufacturing industry.
- US markets will observe Monday as a bank holiday on President's Day.
USD/JPY edges lower to near 150.00 during the Asian session on Monday after registering a volatile session in the previous session. The Japanese Yen (JPY) cheers the improved Machinery Orders data from the country. However, the USD/JPY pair soared on better-than-expected Producer Price Index (PPI) data from the United States on Friday. However, gains were trimmed after dovish remarks on the Federal Reserve’s (Fed) policy from James Bullard, former president of the St. Louis Fed.
Japan’s Machinery Orders (MoM) rose by 2.7% against the expected 2.5% in January, swinging from the previous decline of 4.9%. While the YoY improved to -0.7% compared to the anticipated -1.4% and previous decline of -5.0%. These figures showed improved business confidence in Japan’s manufacturing industry.
Over the weekend, Japanese Finance Minister Shunichi Suzuki said in an interview that “The Bank of Japan (BoJ) holds jurisdiction over monetary policy. But there will be a phase when interest rates go up”.
On the other side, former Federal Reserve official James Bullard, speaking at the National Association for Business Economics (NABE) conference, suggested that the Federal Reserve should contemplate reducing interest rates at its March meeting to prevent stifling economic activity due to higher rates.
The US Producer Price Index (PPI) revealed a year-over-year growth of 0.9%, surpassing the expected 0.6% and previous 1.0%. Additionally, the monthly improvement was 0.3%, contrasting the previous decline of 0.1%. However, the preliminary Michigan Consumer Sentiment Index rose to 79.6 from the prior 79.0, falling short of the anticipated reading of 80.0.
In January, the US Core Producer Price Index (YoY) increased by 2.0%, surpassing the expected 1.6% and the previous 1.7%. Meanwhile, the month-on-month (MoM) data indicated a 0.5% rise, compared to the anticipated 0.1% improvement from the prior decline of 0.1%. With US banks closed for the President's Day bank holiday, the market expects minimal movement in the US Dollar.
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 bounces off two-week low ahead of RBA rate decision
AUD/USD snaps a three-day losing streak to a nearly two-week trough touched on Monday and trades above the 0.6500 mark amid some repositioning trade ahead of the RBA rate decision. Furthermore, the emergence of some USD selling lends support to the pair, though Trump's fresh trade tariff threats and the risk-off impulse could act as a headwind for the Aussie.
USD/JPY bulls turn cautious near two-week high amid tariff jitters
USD/JPY retreats slightly from a two-week high touched on Monday amid renewed USD selling. A turnaround in the global risk sentiment benefits the JPY and weighs on the pair. However, worries that Trump's trade tariffs would complicate the BoJ's path to normalising interest rates could undermine the JPY and cap spot prices.
Gold price remains on the defensive amid mixed cues
Gold price struggles to build on the overnight bounce from sub-$3,300 levels, or a one-week low, and trades with a negative bias during the Asian session on Tuesday. Expectations that Trump's tariffs would boost US inflation and force the Fed to stick to its wait-and-see approach undermine the non-yielding yellow metal.
RBA set to cut interest rate amid soft inflation and weak growth
The Reserve Bank of Australia is holding a monetary policy meeting on Tuesday and is set to lower the Official Cash Rate by 25 basis points to 3.60% from 3.85%. The July monetary policy announcement will take place on Tuesday at 04:30 GMT.
Eurozone Retail Sales drop in May, confirming second quarter weakness
The -0.7% month-on-month decline in retail sales coincided with a -0.3% decline in overall services activity in April. While surveys had previously indicated potential weakness in eurozone services for the second quarter, this concrete data confirms our expectations that GDP growth between April and June may have been negative.