The Japanese currency fell against the US dollar in the first hours of today’s trading, losing half of its gains yesterday, against the backdrop of the dollar’s corrective rise today after slipping below 104 levels due to US economic data that came less than expected, reinforcing hopes that the Federal Reserve will end the process of rising interest rates. In addition to Jobs ‘ data, it fell to its lowest levels in two and a half years in July, while consumer sentiment fell by the most in two years in August amid deteriorating expectations on the labor market and rising borrowing costs with persistent inflation.
The yen’s decline was supported by Japan’s consumer confidence index falling hotter than expected to 36.2 in August 2023 from a 19-month high of 37.1. Household sentiment towards income growth also deteriorated, recording a decline of 0.2 points to 39.0, and employment, down 1.3 points to 42.7. Board member Naoki Tamura said in a speech that the Bank of Japan may have enough data in the first quarter of 2024 to know whether… The country’s inflation can sustainably reach its 2% target. Currently, consumer prices in Japan are already above 2%, but the central bank is keeping interest rates very low because it needs more data. Adding that “it is appropriate at this stage to maintain monetary easing and seriously scrutinize developments in wages and prices.”
Markets are now awaiting the US monthly jobs report, PCE price index, ISM manufacturing PMI, and Q2 GDP numbers to further assess interest rate trends.
Looking at the price movement on the charts, we find that prices rose this morning after a 0.90% slide yesterday following the American data, also declining purchasing power on the pair on the momentum indicators for a 4-hour time interval, while the trends of the moving averages for a period of 20 and 50 days are mixed, Continuing to move above the 145 yen levels, so the pair is likely to continue rising and targeting the 147.70 yen levels again, around which we are monitoring the price Action, as by remaining below it, the pair will return to decline again, targeting the support levels around 145 yen.
