USD/JPY resumes upside journey from 141.00 due to dovish BoJ bets, US Retail Sales eyed
- USD/JPY has found support near 141.00 as the BoJ policy has come into the picture.
- The interest rate decision announced by the Fed was neutral but followed by a hawkish dot plot.
- Monthly US Retail Sales are expected to contract by 0.1% against an expansion of 0.4%.
The USD/JPY pair has resumed its north-side journey after a pullback move to near 141.00 in the London session. The major is aiming to reclaim its fresh six-month high of 141.60 as no tweak is expected in the monetary policy to be announced by the Bank of Japan (BoJ) on Friday.
S&P500 futures have added significant losses in London as investors believe that United States’ recession fears have a little postponed but not faded. The interest rate decision announced by the Federal Reserve (Fed) on Wednesday was neutral but followed with a hawkish dot plot in which Fed chair Jerome Powell confirmed that a neutral stance is merely a skip and the policy-tightening regime is not done yet.
It would be early calling a victory against stubborn US inflation as the core Consumer Price Index (CPI) is showing persistence due to resilient demand for durables and services. Apart from that labor market conditions are still tight as firms are rigorously continuing their hiring process.
The US Dollar Index (DXY) has found intermediates support after dropping to near 103.00. Some volatility is still left in the US Dollar ahead of the monthly Retail Sales data (May). Monthly retail demand is expected to contract by 0.1% against an expansion of 0.4%. This could be the impact of a lower Producer Price Index (PPI) due to weak gasoline prices. Meanwhile, the 10-year US Treasury yields are still solid around 3.83%.
On the Japanese Yen front, the need of keeping inflation steadily above 2% with the stipulation that inflationary pressures should be supported by in-house catalysts rather than higher import prices will force BoJ Governor Kazuo Ueda to keep monetary policy unchanged.