- USD/JPY retreats from a two-week high, though lacks follow-through selling.
- The USD pares intraday gains on softer inflation data and acts as a headwind.
- The risk-on environment undermines the safe-haven JPY and to lends support.
The USD/JPY pair surrenders a major part of its intraday gains to a two-week high and retreats below the 133.00 round-figure mark during the early North American session on Friday.
The modest intraday US Dollar (USD) uptick loses steam after the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index decelerated to a 5% YoY rate in February from 5.3% previous. Adding to this, the Core PCE Price Index - the Fed's preferred inflation gauge - unexpectedly edged lower to a 4.6% YoY rate from 4.7% in January. The data adds to the uncertainty about the Fed's rate-hike path, which acts as a headwind for the Greenback and prompts some intraday selling around the USD/JPY pair.
Bearish traders further took cues from a modest pullback in the US Treasury bond yields, which results in the narrowing of the US-Japan rate differential and benefits the Japanese Yen (JPY). That said, the underlying bullish tone around the global equity markets - amid easing fears of a full-blown banking crisis - continues to undermine the safe-haven JPY and remains supportive of a mildly positive tone around the USD/JPY pair. This, in turn, warrants caution for bearish traders and before positioning for any meaningful corrective pullback.
Friday's US economic docket also features the release of the Chicago PMI and revised Michigan Consumer Sentiment Index, though might do little to provide any meaningful impetus. Nevertheless, the USD/JPY pair still seems poised to register weekly gains for the first time in the previous five and remains at the mercy of the USD price dynamics heading into the weekend.
Technical levels to watch
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
EUR/USD drops toward 1.0700 after US jobs report
EUR/USD came under renewed bearish pressure in the second half of the day on Friday and declined toward 1.0700. Stronger-than-expected Nonfarm Payrolls (NFP) data helps the US Dollar gather strength ahead of the weekend and forces the pair to stay on the back foot.
GBP/USD extends slide below 1.2450 amid a stronger USD
GBP/USD dropped further and hit fresh daily lows below 1.2450 amid a stronger US dollar. The Greenback remains firm following the release of the US May jobs report. Despite losing almost 100 pips on Friday, GBP/USD is still on track for a weekly gain.
Gold falls below $1,960 as US yields rebound after US jobs data
Gold price turned south and declined below $1,960 on Friday. After the data from the US revealed that Nonfarm Payrolls rose 339,000 in May, the benchmark 10-year US Treasury bond yield gained more than 2% and recovered toward 3.7%, weighing heavily on XAU/USD.
Terra Classic price up 35% as whales buy LUNC for v2.1.0 parity upgrade
Terra Classic (LUNC) has turned bullish, inspired by a recent announcement of the version 2.1.0 upgrade. The news has awakened the altcoin from a deep slumber, inspiring hope among token holders as the nominal increase shows signs of sustaining long-term for the token.
Week ahead – RBA and BoC to hold rates but might be tempted to hike
Policy decisions from the RBA and the Bank of Canada will be taking centre stage next week amid an otherwise light agenda. In the US, the ISM services PMI will be the only top-tier release and now that Congress has averted a default by suspending the debt ceiling.