Fundamental Market Analysis for May 07, 2024 USDJPY
USDJPY:
Unfavorable U.S. non-farm payrolls (NFP) and services PMI data last week raised expectations that the U.S. Federal Reserve (Fed) will cut interest rates this year. Traders expect the Fed to start lowering borrowing costs at its September meeting. However, Fed Chair Michelle Bowman said last week that she would be willing to raise interest rates further if progress in bringing inflation down to 2% stalls or reverses.
Richmond Fed President Thomas Barkin said Monday that he sees no evidence yet that inflation is on track, adding that the strength of the labor market will give officials time to gain confidence that inflation will fall. Meanwhile, New York Fed President John Williams noted that rate cuts will eventually happen after all. Williams also said that he sees moderate job growth and that the Fed is looking at the "totality" of the data. Investors will be watching the Fed's speech this week. The dovish tone of Fed officials could put selling pressure on the dollar against its rivals.
As for the Japanese Yen, risk-on sentiment continues to undermine safe-haven currencies such as the Japanese Yen (JPY). Earlier on Tuesday, Japan's chief currency diplomat Masato Kanda said Japanese authorities may take the necessary steps to deal with excessive market volatility, but declined to comment on U.S. Treasury Secretary Janet Yellen's remarks on monetary policy. The Japanese government's recent possible intervention was highlighted on Friday after the April US jobs report came in below expectations.
Trading recommendation: Trade mainly with buy orders at the price level of 154.650. Consider sell orders at the price level of 154.150.
Unfavorable U.S. non-farm payrolls (NFP) and services PMI data last week raised expectations that the U.S. Federal Reserve (Fed) will cut interest rates this year. Traders expect the Fed to start lowering borrowing costs at its September meeting. However, Fed Chair Michelle Bowman said last week that she would be willing to raise interest rates further if progress in bringing inflation down to 2% stalls or reverses.
Richmond Fed President Thomas Barkin said Monday that he sees no evidence yet that inflation is on track, adding that the strength of the labor market will give officials time to gain confidence that inflation will fall. Meanwhile, New York Fed President John Williams noted that rate cuts will eventually happen after all. Williams also said that he sees moderate job growth and that the Fed is looking at the "totality" of the data. Investors will be watching the Fed's speech this week. The dovish tone of Fed officials could put selling pressure on the dollar against its rivals.
As for the Japanese Yen, risk-on sentiment continues to undermine safe-haven currencies such as the Japanese Yen (JPY). Earlier on Tuesday, Japan's chief currency diplomat Masato Kanda said Japanese authorities may take the necessary steps to deal with excessive market volatility, but declined to comment on U.S. Treasury Secretary Janet Yellen's remarks on monetary policy. The Japanese government's recent possible intervention was highlighted on Friday after the April US jobs report came in below expectations.
Trading recommendation: Trade mainly with buy orders at the price level of 154.650. Consider sell orders at the price level of 154.150.
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