Event to watch out for today:
17:00 EET. USD – ISM Manufacturing Index
USDJPY:
The USD/JPY pair is down to 157.20 during Asian trading on Friday. Verbal intervention from the Japanese authorities is providing some support to the Japanese yen (JPY). However, uncertainty over the Bank of Japan’s (BoJ) policy outlook could limit the yen’s gains. Markets in Japan are closed for the rest of the week. Traders are awaiting the release of the ISM US Manufacturing PMI for December, which is due on Friday.
Traders will keep a close eye on possible currency intervention by Japanese officials to prevent the yen from falling. Japan’s Finance Minister Katsunobu Kato last week reiterated his concern over the yen’s fall, repeating his warning to take appropriate measures against excessive currency movements.
Next week, the Bank of Japan will release its quarterly report on the regional economy, which will likely include an assessment of whether wage increases are spreading across the country. This report may provide some insight into the BOJ’s next policy decision on January 24.
On the other hand, speculation that the Federal Reserve (Fed) will cut interest rates less frequently in 2025 and optimism about the U.S. economy could help boost the dollar. The U.S. central bank has indicated that it will be more cautious in cutting rates as inflation continues to remain above its 2% annualized target and the economy remains strong. In addition, US President-elect Donald Trump’s policies are expected to boost growth and potentially spark inflation, which could slow the pace of Fed rate cuts.
Trading recommendation: Watch the level of 157.00, if consolidated below consider Sell positions, if rebounded consider Buy positions.
Origin: FreshForex
