USD/JPY posts fresh multi-decade high above 161.00 ahead of US Inflation release

USD/JPY rises above 161.00 amid firm US Dollar ahead of the US Core PCE Inflation.
US inflation data is expected to have softened in May.
Fears of Japan’s intervention have intensified as Yen weakened to 161.00 against the US Dollar.

Sagar Dua FXStreet

The USD/JPY pair prints a fresh multi-decade high at 161.28, its highest since 1986, on Friday. The asset rises further as the US Dollar (USD) strengthens amid uncertainty ahead of the United States (US) core Personal Consumption Expenditure price index (PCE) data for May, which will be published on Friday.

The US underlying inflation data will provide cues about when and how much the Federal Reserve (Fed) will reduce interest rates this year. The US PCE report is expected to show that price pressures grew at a slower pace of 0.1% against 0.2% in April month-on-month. Annually, the underlying inflation is projected to decelerate to 2.6% from 2.8% in April.

A scenario in which price pressures decline expectedly or more would boost expectations of early rate cuts by the Fed. Currently, financial markets expect that the Fed will start reducing interest rates from the September meeting. The Fed is also expected to deliver two rate cuts this year against one indicated by officials in the latest dot plot.

Meanwhile, the Japanese Yen weakens even though Bank of Japan (BoJ) signalled further policy tightening to ease price pressures, which have been recently boosted by weak Yen that has prompted exports and increased import costs.

Sheer weakness in the Japanese Yen has also prompted expectations of Japan’s stealth intervention. In an early Asian session, Japanese Finance Minister Shunichi Suzuki said on Friday that the authorities were "deeply concerned" about the impact of "rapid and one-sided" foreign exchange moves on the economy, Reuters reported.

Economic Indicator

Core Personal Consumption Expenditures - Price Index (YoY)

The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Why it matters to traders?

After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD remains offered below 1.1800, looks at US data

EUR/USD is still trading on the defensive in the latter part of Thursday’s session, while the US Dollar maintains its bid bias as investors now gear up for Friday’s key release of the PCE data, advanced Q4 GDP prints and flash PMIs.

GBP/USD bounces off monthly lows near 1.3430

GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3430 area, its lowest levels in the month. The move reflects a firmer Greenback, supported by another round of solid US data and a somewhat divided FOMC Minutes.

Gold drifts higher to near $5,000 on heightened US-Iran tensions

Gold price holds positive ground near $5,000 during the early Asian session on Friday. The precious metal edges higher as escalating tensions between the United States and Iran boost safe-haven demand. Traders brace for the preliminary reading of US Gross Domestic Product for the fourth quarter, the Personal Consumption Expenditures and the S&P Global Purchasing Managers Index data, which are due later on Friday.

Ethereum: Active addresses halt growth as US selling pressure eases

Ethereum network growth has declined after two months of explosive increase. US selling pressure has eased following an improvement in the Coinbase Premium Index. ETH extends its range-bound move below the $2,107 resistance and above $1,740 .

Hawkish Fed minutes and a market finding its footing

It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.

Injective token surges over 13% following the approval of the mainnet upgrade proposal

Injective price rallies over 13% on Thursday after the network confirmed the approval of its IIP-619 proposal. The green light for the mainnet upgrade has boosted traders’ sentiment, as the upgrade aims to scale Injective’s real-time Ethereum Virtual Machine architecture and enhance its capabilities to support next-generation payments.