09 September 2024, USD/JPY
USDJPY:
The USD/JPY pair ended its four-day losing streak, trading near 142.90 during the Asian session on Monday. The USD/JPY recovery can be partly attributed to lower than expected Japanese gross domestic product (GDP) data. However, strong economic growth, rising wages and persistent inflationary pressures continue to support expectations that the Bank of Japan (BoJ) may continue to raise interest rates, which could limit the decline in the Japanese Yen (JPY).
Japan's annualised GDP grew by 2.9% in the second quarter, slightly below the preliminary 3.1% and market estimate of 3.2%. Nevertheless, the figure was the strongest annualised rate since the first quarter of 2023. On a quarterly basis, GDP grew 0.7% in the second quarter, falling short of the market forecast of 0.8%, but showing the strongest quarterly growth since the second quarter of 2023.
In addition, the US dollar received support as Friday's US economic data added to uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting. According to the CME FedWatch Tool, markets fully expect the Fed to cut rates by at least 25 basis points (bps) at its September meeting. The probability of a 50 bps rate cut fell slightly to 29.0% from 30.0% a week ago.
The US Bureau of Labour Statistics (BLS) reported that non-farm payrolls (NFP) increased by 142,000 jobs in August, lower than the forecast of 160,000 but better than the downwardly revised July figure of 89,000. Meanwhile, the unemployment rate fell to 4.2%, as expected, down from 4.3% in the previous month.
Trading recommendation: Watch the level of 142.40, if the level is below we consider Sell position, if the level rebounds we consider Buy position.
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