USD/JPY climbs above 142.00 as impact of BoJ policy tweak fades, US factory data eyed

• USD/JPY surpasses 142.00 as investors digest BoJ policy tweak.
• BoJ allowed more flexibility in the YCC but kept interest rates in the negative territory.
• Risk-perceived assets discovered strength as the US core PCE price index softened further.

The USD/JPY pair sustains comfortably above the crucial resistance of 142.00 in the European session. The asset picks strength as the impact of a tweak in the interest rate policy by the Bank of Japan (BoJ) fades.

BoJ Governor Kazuo Ueda allowed more flexibility in the Yield Curve Control (YCC) but kept interest rates in the negative territory as the central bank aims to push inflation steadily above 2%. More flexibility to YCC delivered a strong message that the BoJ is building a roadmap for an exit from the ultra-loose policy.

Meanwhile, S&P500 turns positive after recovery losses in London, portraying a significant recovery in the risk appetite of the market participants. US equities were heavily bought on Friday, driven by upbeat demand for technology stocks.

Risk-perceived assets discovered strength as the United States core Personal Consumption Expenditure (PCE) price index softened further. Consumer spending is consistently declining as individuals avoid purchasing big-ticket items due to the higher burden of sticky inflation.

The US Dollar Index (DXY) remains topsy-turvy around 101.80 as investors await the United States Manufacturing PMI for July to be reported by the Institute of Supply Management (ISM). The economic data is expected to continue its eight months contracting spell amid higher interest rates by the Federal Reserve (Fed). US factory activities are expected to land at 46.5, higher than the former release of 46.0.