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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD struggles for direction amid USD gains

EUR/USD is trimming part of its earlier gains, coming under some mild downside pressure near 1.1730 as the US Dollar edges higher. Markets are still digesting the Fed’s latest rate decision, while also looking ahead to more commentary from Fed officials in the sessions ahead.

GBP/USD drops to daily lows near 1.3360

Disappointing UK data weighed on the Sterling towards the end of the week, triggering a pullback in GBP/USD to fresh daily lows near 1.3360. Looking ahead, the next key event across the Channel is the BoE meeting on December 18.

Gold losses momentum, challenges $4,300

Gold now gives away some gains and disputes the key $4,300 zone per troy ounce following earlier multi-week highs. The move is being driven by expectations that the Fed will deliver further rate cuts next year, with the yellow metal climbing despite a firmer Greenback and rising US Treasury yields across the board.

Litecoin Price Forecast: LTC struggles to extend gains, bullish bets at risk

Litecoin (LTC) price steadies above $80 at press time on Friday, following a reversal from the $87 resistance level on Wednesday. Derivatives data suggests a bullish positional buildup while the LTC futures Open Interest declines, flashing a long squeeze risk.

Big week ends with big doubts

The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.

Aave Price Forecast: AAVE primed for breakout as bullish signals strengthen

Aave (AAVE) price is trading above $204 at the time of writing on Friday and approaching the upper boundary of its descending parallel channel; a breakout from this structure would favor the bulls.