USDJPY:
The yen weakens further after lackluster wage data: June average cash earnings slowed to 1.2 percent y/y versus expectations of 1.7 percent, reducing the likelihood that the Bank of Japan will unwind its ultra-easy stance any time soon.
Fiscal stimulus continues to fuel overheating risks: the government approved an additional JPY 11.8 trillion spending package, partly funded by negative-yield bond issuance up to five-year maturities—widening real-rate differentials with the US and encouraging capital outflows.
Meanwhile, the US ISM-Services index unexpectedly rose to 53.2, reinforcing expectations that the Fed will keep rates “higher for longer,” historically a tail-wind for USDJPY.
Trading Recommendation: BUY 147.45, SL 147.35, TP 148.55
Origin: FreshForex
