Just before during American trading hours, the USD/JPY currency pair has been hovering around the 147.80 level. This shows that the US Dollar is doing well compared to the Japanese Yen. In fact, earlier today, USD/JPY even dipped below this level to an intraday low of 147.51. Since then, it has found its footing and it has come roaring back. On Tuesday, the Greenback has a good day, supported by no-news-is-good-news on US data. That calm is only bolstered by the newfound rhetorical stability provided by Federal Reserve officials as all eyes turn to Chairman Jerome Powell.
The Japanese Yen continues to face heavy pressure against the US Dollar. Market participants are eagerly anticipating upcoming economic indicators that could influence future monetary policy decision-making.
US Economic Data Influences Market Dynamics
That could help explain why the recent trading week have returned to normalized trading volumes on both European and US sessions. This relatively recent development has resulted in dramatic impact on USD/JPY. Today, that’s mostly a function of US Dollar dynamics, including dramatic inflationary signals from the Federal Reserve. US Dollar Index (DXY) The DXY is trading around 97.38, reflecting strong dollar performance mixed economic data.
The Manufacturing Purchasing Managers Index (PMI) fell to 52 in September. This was in line with expectations but a drop from 53 in August. Services PMI came in at a consensus expected 53.9. That’s a small dip from last month’s score of 54.5. The S&P Global Composite PMI index fell to 53.6 in September. This figure seasonally adjusted beat the predictions of 54.6 and is down from August’s reading of 54.6.
These figures illustrate the tough spot economic environment the Federal Reserve is walking into. It should be no less timid with tighter monetary policy in response to inflationary pressures and reemergent economic growth.
Japanese Markets Experience Limited Activity
Markets closed for the Autumnal Equinox holiday. This closure severely inhibited trading activity during the Asian hours. The ongoing holiday break helped to keep market volatility at a minimum. Accordingly, the Japanese Yen traded quietly on the news versus the US dollar. As markets opened up, speculation is now turning towards upcoming economic data releases that could drive more trading activity.
Speculation is increasing for an October increase from the Bank of Japan (BoJ). That rise in expectations comes after the central bank chose to leave its policy unchanged at last week’s meeting. Market analysts are widely anticipating further clarity from the BoJ. This follows their observation on how US economic data has shaped global currency dynamics.
Upcoming Indicators and Market Sentiment
Market participants will be eager to analyze the following high-impact economic releases over the next few days. All of these indicators would have a huge impact on mood. On Wednesday, the Jibun Bank flash PMIs will hit the wire. The point of these data points is to provide a different perspective of Japan’s economic state. The minutes of the last Bank of Japan meeting will be out this Thursday. This announcement comes as a relief to those looking for more transparency into their policy posture and future outlook.
Speculators are re-positioning their books ahead of future news. In the meantime, hawkish comments from U.S. Federal Reserve officials are affecting markets and will likely influence U.S. monetary policy. The balance between supporting economic growth while managing inflation continues to be a critical focus for both the Fed and the BoJ.