USD/JPY stays quiet near 161.50 ahead of US Inflation test
-
USD/JPY
hovers
below
161.50
as
the
US
Dollar
declines
ahead
of
US
Inflation
data. -
The
US
inflation
will
influence
market
speculation
for
Fed
rate
cuts. -
Fears
of
Japan’s
intervention
have
intensified.
The
USD/JPY
pair
consolidates
in
a
tight
range
near
161.50
in
Thursday’s
European
session.
The
asset
trades
back
and
forth
as
investors
have
shifted
to
sidelines
ahead
of
the
United
States
(US)
Consumer
Price
Index
(CPI)
data
for
June,
which
will
be
published
at
12:30
GMT.
Economists
expect
that
annual
headline
inflation
decelerated
to
3.1%
from
May’s
reading
of
3.3%.
In
the
same
period,
the
core
CPI,
which
strips
off
volatile
food
and
energy
prices,
is
estimated
to
have
grown
steadily
by
3.4%.
On
the
month,
the
headline
inflation
grew
at
a
meager
pace
of
0.1%
after
remaining
unchanged,
with
core
CPI
rising
steadily
by
0.2%.
The
inflation
data
will
significantly
impact
firm
speculation
for
the
Federal
Reserve
(Fed)
to
begin
lowering
interest
rates
in
September.
Ahead
of
the
US
Inflation
data,
the
US
Dollar
(USD)
faces
severe
selling
pressure
as
comments
from
Fed
Chair
Jerome
Powell
in
his
testimony
before
Congress
signaled
that
the
US
economic
growth
has
lost
momentum.
Fed
Powell
said
“Labor
market
conditions
have
cooled
considerably
compared
to
where
they
were
two
years
ago,”
and
added
that
the
US
“is
no
longer
an
overheated
economy.”
Market
sentiment
remains
cautious
amid
uncertainty
ahead
of
US
inflation
data.
S&P
500
futures
have
posted
some
losses
in
European
trading
hours.
The
US
Dollar
Index
(DXY),
which
tracks
the
Greenback’s
value
against
six
major
currencies,
hovers
near
a
four-week
low
around
104.85.
Meanwhile,
in
Asia,
the
Japanese
Yen
remains
weak
despite
growing
speculation
of
Japan’s
stealth
intervention.
The
Japanese
Yen
is
close
to
a
multi-decade
low
near
162.00
against
the
US
Dollar
amid
uncertainty
over
room
for
further
policy
tightening
by
the
Bank
of
Japan
(BoJ).
Japanese
Yen
FAQs
The
Japanese
Yen
(JPY)
is
one
of
the
world’s
most
traded
currencies.
Its
value
is
broadly
determined
by
the
performance
of
the
Japanese
economy,
but
more
specifically
by
the
Bank
of
Japan’s
policy,
the
differential
between
Japanese
and
US
bond
yields,
or
risk
sentiment
among
traders,
among
other
factors.
One
of
the
Bank
of
Japan’s
mandates
is
currency
control,
so
its
moves
are
key
for
the
Yen.
The
BoJ
has
directly
intervened
in
currency
markets
sometimes,
generally
to
lower
the
value
of
the
Yen,
although
it
refrains
from
doing
it
often
due
to
political
concerns
of
its
main
trading
partners.
The
current
BoJ
ultra-loose
monetary
policy,
based
on
massive
stimulus
to
the
economy,
has
caused
the
Yen
to
depreciate
against
its
main
currency
peers.
This
process
has
exacerbated
more
recently
due
to
an
increasing
policy
divergence
between
the
Bank
of
Japan
and
other
main
central
banks,
which
have
opted
to
increase
interest
rates
sharply
to
fight
decades-high
levels
of
inflation.
The
BoJ’s
stance
of
sticking
to
ultra-loose
monetary
policy
has
led
to
a
widening
policy
divergence
with
other
central
banks,
particularly
with
the
US
Federal
Reserve.
This
supports
a
widening
of
the
differential
between
the
10-year
US
and
Japanese
bonds,
which
favors
the
US
Dollar
against
the
Japanese
Yen.
The
Japanese
Yen
is
often
seen
as
a
safe-haven
investment.
This
means
that
in
times
of
market
stress,
investors
are
more
likely
to
put
their
money
in
the
Japanese
currency
due
to
its
supposed
reliability
and
stability.
Turbulent
times
are
likely
to
strengthen
the
Yen’s
value
against
other
currencies
seen
as
more
risky
to
invest
in.
Leave a Reply