- The Japanese yen has declined below 149.50 yen against the US dollar, heading towards its lowest levels since early August, as traders’ expectations of interest rate cuts by the US Federal Reserve have diminished in light of the latest US jobs report and the minutes of the Federal Open Market Committee (FOMC).
- Investors are also gearing up for the latest US inflation data, which could impact the Fed’s decision on interest rates in November.
Domestically, economic data showed that producer prices in Japan rose more than expected in September, marking the 43rd consecutive month of producer price inflation. At the same time, the country’s lending activity slowed for the second consecutive month in September to its weakest pace in nearly a year. The Japanese yen has recently come under pressure when new Japanese Prime Minister Shigeru Ishiba and Economy Minister Ryusei Akizawa called for caution before raising interest rates further under current economic conditions.
According to stock trading platforms, Japanese stocks follow Wall Street in rising. The Nikkei 225 index of Japanese stocks rose 0.5% to more than 39,400 points, while the broader TOPIX index added 0.4% to 2,718 points on Thursday, extending its gains from the previous session and tracking Wall Street’s overnight rally as markets prepare for the latest report on consumer inflation in the United States.
Domestic stocks continued to benefit from the weakness of the Japanese yen, which fell to its lowest levels since early August. At the same time, data showed that producer prices in Japan rose more than expected in September, marking the 43rd consecutive month of producer price inflation. Heavyweight stocks in the index performed notably, such as Tokyo Electron (0.6%), Toyota Motor (2%), SoftBank Group (1.7%), Mitsubishi UFJ Financial Group (1.4%), and Fast Retailing (0.8%).
USD/JPY Technical analysis and Expectations Today:
According to the performance on the daily chart, the USD/JPY price is in an upward channel path. As we mentioned before, the psychological resistance level of 150.00 will remain the most important to confirm the strength of bulls’ control over the trend and increase technical buying opportunities. Especially, if the Japanese central bank remains cautious in providing further policy tightening. Technical indicators will move towards strong overbought levels if the currency pair moves towards the resistance levels of 150.85 and 151.60, respectively. On the other hand, and over the same period of time, the current upward channel will be broken if the currency pair declines towards and below the support level of 145.30. Today the currency pair will be affected by the announcement of US inflation figures through the Consumer Price Index, along with the announcement of the weekly jobless claims.
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