USD/JPY refreshes day’s low at 127.50 on upbeat Japan’s PMI, Fed’s Powell eyed
24.05.2022, 05:39

USD/JPY refreshes day’s low at 127.50 on upbeat Japan’s PMI, Fed’s Powell eyed

  • USD/JPY is hovering around 127.60 on higher-than-expected Jibun Bank PMI.
  •  BOJ’s policymaker is advocating for the continuation of a prudent monetary policy.
  • A hawkish commentary is expected from Fed’s Powell in his speech on Tuesday.

The USD/JPY pair has witnessed a steep fall after failing to sustain above Monday’s high at 128.06. The pair moved higher in early Tokyo to near 128.08 but failing to overstep Monday’s high dragged the asset below 128.60. A downside move has been witnessed in the asset after the IHS Markit came up with strong Jibun Bank Purchase Managers Index (PMI) numbers.  

The Japan’s Manufacturing PMI has landed at 53.2 higher than the estimates of 52 while the Services PMI has been recorded at 51.7 vs. 50.6 recorded earlier. This has underpinned the Japanese yen against the greenback.

Meanwhile, Bank of Japan (BOJ) Koji Nakamura, head of the central bank division overseeing monetary policy drafting stated that investors should brace for continuation of quantitative easing by the BOJ in order to assist the economy. The agenda behind the continuation of a prudent monetary policy is to keep prices rising, which will be beneficial for the economy in the longer horizon.

On the dollar front, the US dollar index (DXY) is juggling above 102.24 as investors await the speech from Federal Reserve (Fed) chair Jerome Powell. Guidance on June’s interest rate decision is expected as it might fade some obscurity over the extent of the rate hike. Taking into account, the elevated inflationary pressures and higher employment levels, hawkish guidance is expected from the Fed policymaker.

 

 

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