Events to watch out for today:
15:30 GMT+3. USD – Number of initial claims for unemployment benefits
17:00 GMT+3. USD – ISM Index of Business Activity in the Services Sector
USDJPY:
The Japanese yen (JPY) is strengthening against the US dollar (USD) thanks to a second consecutive month of real wage growth in Japan. Japanese workers’ cash income rose 3.6% year-on-year in July, down from June’s 4.5% increase but the highest since January 1997, exceeding market expectations of 3.1%. This strong performance reinforces speculation that the Bank of Japan (BoJ) may conduct another interest rate hike before the end of 2024.
Bank of Japan (BoJ) board member Hajime Takata made several comments on the bank’s policy outlook and economic outlook during his speech on Thursday. Japan’s economy is recovering at a moderate pace, although some weak signs have been seen. There has been a lot of volatility in stock and currency markets, but we still see that reaching the inflation target is not far off.’
The US dollar is recovering its recent losses, helped by a rise in US Treasury bond yields. However, the dollar ran into trouble after July’s JOLTS US job openings data came in below expectations, signalling a further slowdown in the labour market. Traders are now awaiting the release of ISM Services PMI and Initial Jobless Claims due on Thursday.
Trading recommendation: Trade predominantly with Sell orders from the current price level
Origin: FreshForex
