Japanese Yen improves as 10-year JGB yield remains stable, US CPI awaited

• 
  The
  Japanese
  Yen
  strengthens
  as
  overseas
  investors
  anticipate
  the
  BoJ
  raising rates
  in
  July.
• 
  The
  Japanese
  government’s
  10-year
  JGB
  yield
  remains
  stable
  at
  around
  1.09%,
  close
  to
  its
  recent
  high
  of
  1.10%.
• 
  Fed
  Chair
  Powell
  highlighted
  the
  urgent
  need
  to
  monitor
  the
  deteriorating
  labor
  market.

The
Japanese
Yen
(JPY)
edges
higher on
Thursday,
possibly
driven
by
the
rising
speculation
that
the
Bank
of
Japan
(BoJ)
might
raise
interest
rates
at
its
upcoming
July
meeting.
This
development
supported
the
JPY
while
weakening
the

USD/JPY
pair.

The
Japanese
government’s
10-year
JGB
yield
holds
steady
at
approximately
1.09%,
near
its
peak
of
1.1%
recorded
on
July
3.
The
stability
comes
amidst
selling
pressure
on
Japanese
government

bonds,
reflecting
overseas
investors’
anticipation
that
the
Bank
of
Japan
may
raise
interest
rates
in
response
to
a
weakening
Japanese
Yen,
as
reported
by
Nikkei
Asia.

The
US
Dollar
(USD)
weakened,
likely
impacted
by
lower
US
Treasury
yields.

Fed
Chair
Jerome
Powell
highlighted
the
urgent
need
to
monitor
the
deteriorating
labor
market
on
Wednesday
while
expressing
optimism
about
the
downward
trajectory
of
inflation.

Traders
are
now
eyeing
the
upcoming
US

Consumer
Price
Index
(CPI)
data
for
June,
scheduled
for
release
on
Thursday,
for
more
clarity
on
the
Federal
Reserve’s
(Fed)
monetary
policy
direction.

Daily
Digest
Market
Movers:
Japanese
Yen
improves
amid
hawkish
sentiment
surrounding
the
BoJ

• Peter
  Boockvar,
  chief
  financial
  officer
  at
  US-based
  Bleakley
  Financial
  Group,
  said
  that
  the
  Yen’s
  weakness
  will
  trigger
  the
  BoJ
  to
  “react
  sooner
  rather
  than
  later,”
  per
  Reuters.
• Reuters
  reported
  on
  Wednesday,
  citing
  unnamed
  sources,
  the
  Bank
  of
  Japan
  will
  likely
  trim
  this
  year’s
  economic
  growth
  forecast
  and
  project
  inflation
  will
  stay
  around
  its
  2%
  target
  in
  coming
  years
  at
  its
  meeting
  this
  month.
• Fed
  Chair
  Jerome
  Powell
  stated
  in
  his
  Congressional
  testimony
  on
  Tuesday,
  “More
  good
  data
  would
  strengthen
  our
  confidence
  in
  inflation.”
  Powell
  emphasized
  that
  a
  “Policy
  rate
  cut
  is
  not
  appropriate
  until
  the
  Fed
  gains
  greater
  confidence
  that
  inflation
  is
  headed
  sustainably
  toward
  2%.”
  He
  also
  noted
  that
  “first-quarter
  data
  did
  not
  support
  the
  greater
  confidence
  in
  the
  inflation
  path
  that
  the
  Fed
  needs
  to
  cut
  rates.”
• According
  to
  a
  Bloomberg
  report
  on
  Tuesday,
  the
  Bank
  of
  Japan
  is
  conducting
  three
  in-person
  meetings
  with
  banks,
  securities
  firms,
  and
  financial
  institutions
  over
  the
  next
  few
  days.
  The
  purpose
  of
  these
  meetings
  is
  to
  assess
  a
  feasible
  pace
  for
  scaling
  back
  its
  purchases
  of
  Japanese
  Government
  Bonds.
• On
  Tuesday,
  Japan’s
  Finance
  Minister
  Shunichi
  Suzuki
  underscored
  the
  significance
  of
  maintaining
  fiscal
  discipline
  to
  bolster
  confidence
  in
  long-term
  fiscal
  health.
  Suzuki
  also
  mentioned
  monitoring
  closely
  the
  discussions
  at
  the
  BoJ
  meeting
  concerning
  the
  bond
  market,
  as
  reported
  by
  Reuters.
• The
  Japanese
  Yen
  may
  struggle
  due
  to
  overseas
  asset
  purchases
  by
  Japanese
  individuals
  through
  the
  newly
  revamped
  tax-free
  investment
  scheme,
  the
  Nippon
  Individual
  Savings
  Account
  (NISA)
  program.
  According
  to
  Nikkei
  Asia,
  the
  scale
  of
  these
  purchases
  is
  expected
  to
  exceed
  the
  country’s
  trade
  deficit
  during
  the
  first
  half
  of
  this
  year.
• Japan’s
  Ministry
  of
  Finance
  reported
  on
  Monday
  that
  Japanese
  investment
  trust
  management
  companies
  and
  asset
  management
  firms
  bought
  ¥6.16
  trillion
  ($38
  billion)
  more
  in
  offshore
  equities
  and
  investment
  fund
  shares
  than
  they
  sold
  during
  the
  first
  six
  months
  of
  the
  year.

Technical
Analysis:
USD/JPY
hovers
around
161.50

USD/JPY
trades
around
161.60
on
Thursday,
maintaining
an
upward
trajectory
within
an
ascending
channel
pattern,
indicating
a
bullish
bias
according
to
daily
chart
analysis.
Supporting
this

outlook,
the
14-day
Relative
Strength
Index
(RSI)
sits
just
below
the
70
level,
suggesting
potential
overbought
conditions.
A
breach
above
this
level
could
signal
a
need
for
caution
and
a
possible
correction.

The
USD/JPY
pair
may
aim
for
psychological
resistance
near
163.00,
located
at
the
upper
boundary
of
the
ascending
channel.
A
successful
breakout
above
this
level
could
reinforce
bullish
sentiment,
potentially
pushing
the
pair
toward
significant
resistance
around
163.50.

Conversely,
initial
support
is
expected
around
the
21-day
Exponential
Moving
Average
(EMA)
at
160.13.
A
drop
below
this
level
might
trigger
selling
pressure,
testing
the
lower
boundary
of
the
ascending
channel
near
the
psychological
level
of
160.00.
A
further
decline
below
this
channel
support
could
see
the
pair
revisiting
June’s
low
around
154.55.

USD/JPY:
Daily
Chart