Fundamental Market Analysis for May 14, 2024 USDJPY
The Dollar-Yen pair continues to rally around 156.20 and higher in the early hours of Asian trading on Tuesday. The Japanese Yen is losing ground against the US Dollar (USD) despite the hawkish signal from the Bank of Japan (BoJ) to reduce Japanese government bond purchases on Monday, as well as unfavorable Non-Farm Payrolls (NFP) data for April last week.
Investors will be more focused on key US economic data this week, including the Producer Price Index (PPI), Consumer Price Index (CPI) and retail sales. These reports will provide some hints as to whether inflation remains intractable, is falling slightly, or even possibly rising. The Producer Price Index (PPI), which reflects inflation at the wholesale level, is due out Tuesday and is expected to have risen 2.2% in April from a year earlier. The core PPI, which excludes energy and food costs, is expected to rise 2.4% y/y over the same reporting period. Traders can use the PPI report to gauge potential CPI results, and better-than-expected data could continue to strengthen the US Dollar (USD) against the Japanese Yen (JPY).
As for the JPY, the Bank of Japan (BoJ) gave a hawkish signal on Monday by reducing the amount of Japanese government bonds (JGBs) it offered to buy as part of its regular buying operation. The move is expected to put upward pressure on Japanese bond yields and possibly narrow the gap between Japan and the US, which has weakened the Japanese Yen. However, the recent movement has been muted and has had little impact on the yen exchange rate. On Thursday, Japan will release the country's Q1 2024 GDP growth data. Stronger figures may lift the yen and limit the USD/JPY pair growth in the near term.
Trading recommendation: Trade mainly with Buy orders from the current price level.
Investors will be more focused on key US economic data this week, including the Producer Price Index (PPI), Consumer Price Index (CPI) and retail sales. These reports will provide some hints as to whether inflation remains intractable, is falling slightly, or even possibly rising. The Producer Price Index (PPI), which reflects inflation at the wholesale level, is due out Tuesday and is expected to have risen 2.2% in April from a year earlier. The core PPI, which excludes energy and food costs, is expected to rise 2.4% y/y over the same reporting period. Traders can use the PPI report to gauge potential CPI results, and better-than-expected data could continue to strengthen the US Dollar (USD) against the Japanese Yen (JPY).
As for the JPY, the Bank of Japan (BoJ) gave a hawkish signal on Monday by reducing the amount of Japanese government bonds (JGBs) it offered to buy as part of its regular buying operation. The move is expected to put upward pressure on Japanese bond yields and possibly narrow the gap between Japan and the US, which has weakened the Japanese Yen. However, the recent movement has been muted and has had little impact on the yen exchange rate. On Thursday, Japan will release the country's Q1 2024 GDP growth data. Stronger figures may lift the yen and limit the USD/JPY pair growth in the near term.
Trading recommendation: Trade mainly with Buy orders from the current price level.
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