Forex world

October 02, 2023

USD/JPY hits fresh 11-month highs around 149.70

- USD/JPY gains traction near 149.70 amid the USD demand.

- BoJ Governor said that the central bank has a long way to go before exiting its ultra-loose monetary policy.

- The US annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations.

- Investors will monitor the US ISM Manufacturing PMI, Fed Chair Powell’s speech.

The USD/JPY pair holds positive ground around 149.70 during the early Asian session on Monday. The pair trades at the highest level in 11 months after bouncing off the low of 148.52 following the release of the Bank of Japan (BoJ) Summary of Opinions. Meanwhile, the US Dollar Index (DXY) holds above 106.00 amid the renewed demand.

On Saturday, BoJ Governor Kazuo Ueda said that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. Earlier Monday, BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22 stated that BOJ does not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that the end to negative rate must be tied to success of achieving 2% inflation target. One board member added that given recent FX and oil price moves, there is a chance

Furthermore, the latest data from the BoJ showed overall business conditions of the large manufacturing companies in Japan improved in the third quarter (Q3). The Japanese Tankan Large Manufacturing Index (Q3) came in at 9.0 from the previous reading of 5.0, better than the expectation of 6.0.

Across the pond, Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Traders will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday.

About the data, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from the previous month of 3.4%, in line with the market estimation. The annual Core PCE Price Index grew 3.9% from 4.3% in July, meeting the expectation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose by 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market estimations.

In the absence of top-tier economic data released from the Japanese docket this week, the USD/JPY pair remains at the mercy of USD price dynamics. However, traders will be cautious about the potential FX intervention from Japanese authorities as the pair trades near the 150.00 mark. Also, the US ISM Manufacturing PMI for September will be due on Monday ahead of the Fed Chair Powell’s speech.

USD/JPY


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