USD/JPY extends its recovery to 147.60 amid generalised Yen weakness

The US Dollar rallies to 147.60 highs with the Yen on the defensive ahead of Japan's CPI data.
Investors' fears of a hawkish Powell at the Jackson Hole meeting keep the US Dollar buoyed.
Japanese inflation is expected to have eased in July, which might put BoJ's tightening plans into question.

Guillermo Alcala FXStreet

The US Dollar accelerated its recovery against a weaker Japanese Yen on Friday. USD/JPY’s rebound from Wednesday's lows right below 146.90 has extended to levels near 147.65, although, from a broader perspective, the pair maintains a choppy and volatile behaviour, ranging between 146.70 and 148.00

The Greenback is holding recent gains on Thursday, with the focus on preliminary US PMI figures and Fed Powell’s speech on Friday, while in Japan, July’s CPI data might give further clues about the outcome of the next BoJ meeting

Traders wary of selling Dollars ahead of Powell

Investors are wary about placing large US Dollar shorts ahead of Fed Powell’s speech at the Jackson Hole Symposium on Friday. Fears that the Fed chief might deliver a not-dovish-enough message prioritising the inflationary risks of tariffs above the signals of labour market deterioration are buoying the USD on Thursday.

Before that, the US preliminary S&P Global PMIs and Jobless Claims figures will provide further insight about the economic growth prospects and the strength of the labour market. In the current context, the USD is likely to be more sensitive to positive readings than to negative ones.

In Japan, National Consumer Price Index figures are expected to show that inflation moderated somewhat in July. In this case, the risk is on a softer-than-expected CPI that might cast further doubts on BoJ’s tightening plans, and add pressure on the JPY.

Economic Indicator

S&P Global Composite PMI

The S&P Global Composite Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging US private-business activity in the manufacturing and services sector. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the private economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for USD.

Economic Indicator

National CPI ex Fresh Food (YoY)

Japan’s National Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households nationwide excluding fresh food, whose prices often fluctuate depending on the weather. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.