USD/JPY treads water around 145.40 after upbeat US employment data
- USD/JPY recovers two-day losses after upbeat US Initial Jobless Claims.
- Traders speculate intervention by Japanese authorities to protect its currency.
- PBoC rate cut could provide support to stem the Japanese Yen.
USD/JPY snaps a two-day losing streak, hovering around 145.40 during the Asian session on Monday. The USD/JPY pair cheers employment and manufacturing survey data. However, market participants are currently in search of additional cues that could provide them with a clearer understanding of the US Federal Reserve’s (Fed) direction regarding monetary policy tightening.
The Federal Open Market Committee’s (FOMC) minutes of the July meeting disclosed a difference of opinions among Fed members concerning interest rate hikes. While certain members expected that higher interest rates could lead to a potential economic contraction, the majority of policymakers kept committed to reducing inflation and reaching the 2% target.
Additionally, traders speculate on the potential intervention by Japanese authorities to protect the Japanese currency from further appreciation against the greenback. Such a step could impact the price movement of the USD/JPY pair, influencing its overall price action.
As the People's Bank of China (PBoC) cut its one-year benchmark lending rate by 10 basis points (bps) on Monday, seeking the credit demand to be encouraged. Worsening property slump and low consumer spending have raised concerns over China’s recovery, which could lead to more policy stimulus by the Chinese authorities. This development could provide support to stem the currency of export-dependent Japan.
Furthermore, the annual Jackson Hole Symposium during the week will be a focal point of interest. During this event, central bankers, policy experts, and academics will come together to extensively analyze the worldwide economic outlook, with a specific focus on addressing the prevailing inflationary situation. Market participants will closely monitor upcoming US data releases during the week, namely Home Sales and the preliminary S&P Global PMI surveys for August along with Japan’s Consumer Price Index (CPI).