17 September 2024, USD/JPY
Event to pay attention to today:
15:30 GMT+3. USD - Retail Sales
USDJPY:
The USD/JPY pair is regaining lost ground near 140.80, marking the end of a five-day losing streak in the early Asian session on Tuesday. However, the pair's gains may be constrained by growing expectations that the US Federal Reserve (Fed) will commence its easing cycle at its September meeting. Later this week, the US Federal Reserve and Bank of Japan (BoJ) monetary policy meetings will be the focus of attention.
The US dollar (USD) is facing continued pressure amid heightened expectations of a policy easing by the Federal Reserve. At the Kansas City Fed's annual economic symposium in Jackson Hole last month, Fed Chairman Jerome Powell made it clear that inflation is under control, just enough for the Fed to finally feel comfortable with policy easing. Mr. Powell also noted that the current fragility of the labor market is a significant factor influencing the Fed's decision to take action.
There is a growing expectation that the Federal Reserve will implement a significant 50 basis point reduction in interest rates at its meeting on Wednesday. The likelihood of this occurring has risen from 50% last Friday to 67% today. In advance of pivotal interest rate decisions in the United States and Japan, the U.S. Census Bureau will release its retail sales report on Tuesday. Analysts anticipate a 0.2% increase in the figure for August, compared to the previous estimate of 1.0%.
In contrast, the Bank of Japan is not anticipated to increase interest rates on Friday. However, the majority of economists surveyed by Reuters anticipate a rate hike by the end of the year. Richard Kaye, Portfolio Manager for Japanese Equities at Comgest, stated, "The primary driver of the yen is the interest rate or yield differential with the U.S., and the primary actor in that is the Fed, and the Fed appears prepared to cut."
Trade recommendation: Trading mainly by Sell orders from the current price level.
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