USD/JPY eyes 141.00 as upbeat US households’ spending supports hawkish Fed stance

The USD/JPY pair is looking to capture the critical resistance of 141.00 in the early Tokyo session. The asset is expected to extend its rally towards 141.00 as the street is anticipating that robust consumption expenditure by United States' households would force the Federal Reserve (Fed) to stick to its policy-tightening spree in order to keep pressure on inflation.

S&P500 futures have posted stellar gains in early Asia as US President Joe Biden is sending the US debt-ceiling raise deal to Congress after getting its agreement from Republicans. Fears of a default by the United States economy have started fading as the $31.4 trillion borrowing limit will get raised for two years. White House announced that the agreement will neither cut health coverage nor increase poverty.

However, fears of more interest rate announcements have soared as the United States economy is showing resilience despite higher pressure on pockets due to higher rates. April’s US core Personal Consumption Expenditure (PCE) expanded by 0.4% vs. an estimate of 0.3%. Higher expenditure by US individuals is expected to fuel inflationary pressures. Apart from them, US Durable Goods Orders expanded by 1.1% while the street was expecting a contraction by 1.0%.

On the Japanese Yen front, Tuesday’s Employment data will be keenly watched. The Unemployment Rate is seen declining to 2.7% from the former release of 2.8%. While the Job/Applicants Ratio is seen steady at 1.32.

Meanwhile, investors are keeping the focus on further development about tweaking Yield Curve Control (YCC) by the Bank of Japan (BoJ). BoJ Governor Kazuo Ueda cited the central bank is considering strategies for tweaking YCC. He further added that shortening the duration of bond yield targets to a 5-year zone from the current 10-year is also a part of YCC.