USD/JPY Falls To 147.10 Amidst a Weaker USD And Anticipation Of US Data
USD/JPY loses momentum close to 147.12 as the US Dollar weakens. In August, the US Consumer Price Index (CPI) increased 0.6% compared to 0.2% in July. As a result of the Bank of Japan's (BoJ) hawkish remarks, market participants anticipate a dramatic shift in the BoJ's monetary policy outlook.

During Thursday's early Asian session, the USD/JPY pair loses ground, falling below the mid-147.00s. The weakening of the US Dollar (USD) has weighed on the USD/JPY pair, which is currently trading near 147.12, down 0.23 percent on the day.
The US Bureau of Labour Statistics reported on Wednesday that the headline inflation rate for August was the highest monthly gain in 14 months, with the US Consumer Price Index (CPI) increasing 0.6% MoM from the previous reading of 0.2%. In the meantime, the annual rate increased to 3.7% from 3.2%, exceeding market expectations. The core CPI, which excludes volatile food and energy prices, increases from 0.2% in July to 0.3% in August. The annual core CPI arrived at 4.3%, down from 4.7% previously.
In response to the data, the US Dollar (USD) surged before losing ground as the markets anticipate that the FOMC will leave interest rates unchanged at its meeting next week. However, the figures imply that the Fed should be on the watch for any re-acceleration in inflation in the next months. Investors have priced in a 97% chance that the September interest rate will remain unchanged at 5.25-5.50%. According to the CME Fedwatch Tool, the probability of a rate rise at the November meeting increased to 49.2%.
On the front of the Japanese Yen, market participants are pricing in a massive shift in the prognosis for the Bank of Japan's (BoJ) monetary policy following the hawkish remarks made by BoJ Governor Kazuo Ueda over the weekend. Governor Ueda of the Bank of Japan stated in an interview on Monday that the central bank could exit its negative interest rate policy when its inflation objective of 2% is near and sufficient evidence would be available by the end of the year to determine whether negative interest rates should continue. In addition, Japanese Minister of Finance Shunichi Suzuki stated on Wednesday that he will endeavour to conduct debt management in an appropriate manner.
The Cabinet Office reported on Thursday that Japan's Machinery Orders fell 13% in July, compared to a 5.8% decline in June. A monthly decline of 1.1% occurred after a 2.7% increase in June. Both figures came in below market expectations.
Traders will then focus on Thursday's Initial Jobless Claims, Producer Price Index (PPI), and Retail Sales reports. Traders will use these figures as a guide to identify USD/JPY trading opportunities.
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