USDJPY:
The Japanese yen (JPY) is appreciating against the US dollar (USD) for the second consecutive day amid hawkish sentiment towards the Bank of Japan (BoJ). The latest data on Japan’s second quarter GDP growth confirms the possibility of an interest rate hike by the BoJ in the near future.
Japan’s machinery orders, a key indicator of capital spending, rose 2.1% month-on-month in June, exceeding the forecasted 1.1% increase. Markets await Japan’s inflation data later this week to get further insight into the direction of the Bank of Japan’s monetary policy.
The US Dollar continues to lose ground after dovish comments from Federal Reserve (Fed) officials that reinforced expectations of an interest rate cut by the US central bank in September. In addition, US economic data last week showed that the Producer Price Index (PPI) and Consumer Price Index (CPI) indicated weakening inflation.
Federal Reserve Bank of San Francisco President Mary Daly on Sunday emphasized that the U.S. central bank should take a gradual approach to reducing borrowing costs, the Financial Times reported. In addition, Federal Reserve Bank of Chicago President Austan Goolsbee warned that central bank officials should be cautious about pursuing restrictive policies longer than necessary.
Trading recommendation: Trade predominantly with Sell orders from the current price level
Origin: FreshForex
