USD:JPY.png

USD/JPY maintains losses near 140.10-15 as it remains under pressure near the intraday low and defends yesterday's retreat from the yearly high as traders await Bank of Japan (BoJ) action during Friday's Asian session.

The Yen pair reached a multi-day high the day before after the Federal Reserve (Fed) halted its market hawkishness and the Bank of Japan (BoJ) defended its easy-money policy. The yields curve control (YCC) policy and the market's recent pessimism about signs of a future change in the ultra-easy monetary policy provoke the BoJ doves, who exert downward pressure on the Yen pair prices during the lethargic Tokyo opening hours.

On Thursday, Japan's Merchandise Trade Balance deficit widened for the month of May, while Machinery Orders increased for April.

Similarly, US Retail Sales growth for May is 0.3%, compared to -0.1% expected and 0.4% previous readings, while the Core readings, retail sales excluding automobiles, match 0.1% market expectations for the month, compared to 0.4% previously. In addition, the NY Fed Empire State Manufacturing Index increases to 6.6 in June, compared to -15.1 expected and -31.8 previously, while the Philadelphia Fed Manufacturing Index decreases to -13.7 for the same month, compared to -10.4 previously and -14 market expectations. In addition, US Industrial Production for May decreases to -0.2% from 0.1% expected and 0.5% previously, and Initial Jobless Claims for the week ending June 9 are revised upwards to 262K from 249K expected.

Governor Kazuo Ueda of the Bank of Japan stated last week that the central bank should continue "monetary easing patiently." Combined with the dovish comments of other BoJ officials and Japan's muddled economic data, this suggests that no action will be taken at today's monetary policy meeting. However, recent inflation and employment data from Japan are encouraging and therefore hint at the Asian superpower's retreat from ultra-loose monetary policy. This highlights the BoJ's hints for the July meeting and the YCC's need for clear direction.

In addition, the tone of BoJ Governor Ueda and second-tier US data, as well as the movements of the bond market, will be attentively monitored for clear direction.

However, the CME's FedWatch Tool indicates that nearly 67% of market participants are betting on a 25 basis point (bps) rate increase in July. The traders' lack of conviction in the Federal Reserve's (Fed) nearly unambiguous signals for a hawkish move in July is similarly illustrated. Wall Street benchmarks rose by more than 1% each, while 10-year US Treasury bond yields fell to 3.72 percent. In addition, the US Dollar Index (DXY) fell to its lowest level since May 12, touching 102.15, its lowest level in three months.

Consequently, the USD/JPY pair is justifying the aforementioned conflicting catalysts amidst the sentiment preceding the BoJ meeting. Bears have fewer reasons to celebrate, however, unless the Japanese central bank sends hawkish signals.

Trade

Market

Market Analysis

Trading Tutorial

Bonus rebate to help investors grow in the trading world!