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USD/JPY climbs near 137.00 as the DXY strengthens and Japan data is mixed
USD/JPY is inching upwards to reclaim its 23-year high above 137.00. The DXY has risen in anticipation of an extended period of rising US interest rates. The yen bulls were further hurt by Japan's mixed Industrial output data.
The USD/JPY pair is seeking to reclaim its fresh 23-year high around 137.00 as the US dollar index (DXY) has risen in response to Jerome Powell's hawkish comments. In his statement at the annual Forum on Central Banking of the European Central Bank (ECB), Fed Chairman Jerome Powell reiterated the Fed's goal of achieving price stability in the US economy.
According to Fed Powell, the US economy is rock solid in light of overall demand and labor market tightness. This makes it efficient to endure the effects of the procedure of quick rate hikes. Increasing price pressures have reduced the real income of people, but the economy is robust enough to withstand these headwinds.
The only tool that can restrain the skyrocketing price increase is the announcement of interest rate increases. However, the market confidence has been shaken by Fed Chairman Powell's comments that they cannot guarantee an inflation rate near 2 percent. This reveals a protracted uptrend for the U.S. dollar index (DXY), as lower interest rates in the developed economy will be market participants' bedtime narrative. The DXY is rising towards its 19-year high of 105.79.
In Tokyo, contradictory economic data has further undermined the yen bulls. The monthly Industrial Production results have plummeted to -7.2%, compared to estimates of -0.3% and the previous announcement of -1.5%. While the yearly result has improved to -2.8% from the previous announcement and the consensus estimate of -5.9% and -4.9.%, respectively.
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