Fundamental Market Analysis for July 05, 2024 USDJPY
An event to look out for today:
15:30 GMT+3. USD - Unemployment rate
USDJPY:
The rise in USD/JPY raises expectations of currency intervention by the Japanese authorities. "Currently, USD/JPY will be guided by UST yields and the US dollar. For USD/JPY to reverse downward, it will require the US Dollar to turn around/Fed Fed to cut rates or the BoJ to signal an intention to normalize urgently (rate hike or increased pace of balance sheet reduction). None of the above seems likely to happen," according to OCBC strategists Francis Cheung and Christopher Wong.
Following the June 11-12 Federal Open Market Committee (FOMC) meeting, Federal Reserve (Fed) officials emphasized that the approach depends on data and refrained from cutting interest rates until further observations. Some Fed officials were unsure whether they needed to cut interest rates, while several policymakers said they would need to raise rates again if inflation rebounds.
However, the dollar's gains may be limited as recent US PCE inflation data and a weaker-than-expected services PMI have fueled expectations of a Fed interest rate cut this year. Later in the day, traders will focus on the US employment data for June. The US NFP is projected to show an increase of 190K jobs in June, while the unemployment rate is expected to remain unchanged at 4%. Finally, average hourly earnings will fall to 3.9% y/y in June from 4.1% in May.
Trading recommendation: Trade mainly with buy orders at the price level of 160.850. Consider sell orders at the price level of 160.100.
15:30 GMT+3. USD - Unemployment rate
USDJPY:
The rise in USD/JPY raises expectations of currency intervention by the Japanese authorities. "Currently, USD/JPY will be guided by UST yields and the US dollar. For USD/JPY to reverse downward, it will require the US Dollar to turn around/Fed Fed to cut rates or the BoJ to signal an intention to normalize urgently (rate hike or increased pace of balance sheet reduction). None of the above seems likely to happen," according to OCBC strategists Francis Cheung and Christopher Wong.
Following the June 11-12 Federal Open Market Committee (FOMC) meeting, Federal Reserve (Fed) officials emphasized that the approach depends on data and refrained from cutting interest rates until further observations. Some Fed officials were unsure whether they needed to cut interest rates, while several policymakers said they would need to raise rates again if inflation rebounds.
However, the dollar's gains may be limited as recent US PCE inflation data and a weaker-than-expected services PMI have fueled expectations of a Fed interest rate cut this year. Later in the day, traders will focus on the US employment data for June. The US NFP is projected to show an increase of 190K jobs in June, while the unemployment rate is expected to remain unchanged at 4%. Finally, average hourly earnings will fall to 3.9% y/y in June from 4.1% in May.
Trading recommendation: Trade mainly with buy orders at the price level of 160.850. Consider sell orders at the price level of 160.100.
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