Event to pay attention to today:
15:30 EET. USD – Retail Sales
USDJPY:
The USD/JPY pair is trading unchanged around 154.10 in the early Asian session on Tuesday. Traders are opting for a cautious watch ahead of the Federal Reserve (Fed) and Bank of Japan interest rate decision later this week. Tuesday will see the release of US retail sales data for November.
Strong economic data from the US is not helping to strengthen the dollar as the market is cautious ahead of key events. Data released on Monday showed that the composite purchasing managers’ index (PMI) in the US rose to 56.6 in December, up from 54.9 previously. Meanwhile, the PMI for services improved to 58.5 from 56.1 in December. The PMI for manufacturing fell to 48.3 from 49.7.
The Fed will make its next interest rate decision on Wednesday and is expected to cut rates by 25 basis points (bps).
On the other hand, rising expectations that the Bank of Japan (BoJ) will keep rates unchanged at its December meeting on Thursday could put pressure on the Japanese Yen (JPY). Markets currently rate the probability of a rate hike in December at less than 30%. Some BoJ policymakers appear to be in no hurry to tighten monetary policy as the risk of inflation exceeding tolerance is low, even though Japan’s borrowing costs remain close to zero.
Trade recommendation: Watch the level of 154.30, when fixing above consider Buy positions, when rebounding consider Sell positions.
Origin: FreshForex
