USD/JPY rebounds above 145.00 on Fed hawkish comments and high US yields

• USD/JPY trades at 149.86, up 0.70%, as upbeat earnings from a major US tech company boost market sentiment.
• Hawkish comments from Boston and Philadelphia Fed Presidents suggest a steady rate environment, fueling USD gains.
• Upcoming Tokyo CPI data and Fed Chair Powell’s speech eyed for further direction; DXY advances 0.44% on hawkish Fed remarks.

The US Dollar (USD) recovers some ground against the Japanese Yen (JPY), after posting back-to-back days of losses, as market sentiment turned upbeat on an earnings report of a big tech US company. Nevertheless, US Federal Reserve officials remained hawkish as the waters settled, while economic data from the United States (US) was mixed. At the time of writing, the USD/JPY is trading at 149.86, gaining 0.70%.

USD/JPY gains 0.70% on Fed’s restrictive stance, despite US mixed data

After an absence of one day, Federal Reserve officials are taking the stance as the Jackson Hole Symposium commences. Recently, Boston Fed President Susan Collins commented the Fed “may be” at a place to hold rates steadily to curb inflation towards its 2% target in a “reasonable amount of time.” She said that more rate hikes are possible, and it’s premature to signal the timing of rate cuts.

Earlier, Philadelphia Fed President Patrick Harker stated the Fed must keep its restrictive stance and added the Fed has probably done enough but must hold rates at the current level. He noted that inflation must fall to pave the way for rate cuts while acknowledging an eventual economic slowdown.

Before Wall Street opened, the US Department of Commerce revealed Durable Goods Orders for July plummeted sharply from 4.4% to -5.2% MoM, exceeding estimates. However, excluding transport orders rose 0.5% MoM, above the consensus and June’s 0.2%. In other data, the US Department of Labor revealed the labor market remains tight, as shown by unemployment claims for the week ending August 19, which rose by 230K, below estimates of 240K and 9K below the previous week.

The US Dollar Index (DXY), a gauge of the buck’s value against a basket of currencies, advances 0.44%, up at 103.818, underpinned by US Treasury bond yields climbing on Fed’s Harker words. Hence, the USD/JPY extended its uptrend after bouncing off weekly lows of 144.53, as buyers reclaimed the 145.00 mark.

On the Japanese front, Tokyo’s Consumer Price Index (CPI) will be revealed on August 25 at around 00:30 GMT, with estimates of circa 2.9% on core CPI readings, which could shed some clues for USD/JPY traders.

On the US front, Fed Chair Jerome Powell’s speech will provide forward guidance regarding the last four months of the year as inflation decelerates.

USD/JPY Technical Levels