USD/JPY holds positive ground above 142.00, eyes on US PMI, FOMC Minutes

• USD/JPY trades in positive territory for two straight days on Wednesday.
• The US final Manufacturing PMI for December came in weaker than expected, easing from 48.2 to 47.9.
• BOJ’s Ueda said that the possibility of the BoJ sustainably achieving the inflation target seems to be gradually rising.
• Investors await the final US ISM Manufacturing PMI report and the Fed’s latest Meeting Minutes, due later on Wednesday.

The USD/JPY pair edges higher above the 142.00 mark during the early Asian session on Wednesday. The rebound of US Dollar (USD) lends some support to the pair. Investors await the US ISM Manufacturing PMI for December, due later on Wednesday, which is expected to show an increase to 47.1 from 46.7 in the previous reading. USD/JPY currently trades near 142.10, gaining 0.10% on the day.

The US final Manufacturing PMI for December came in at 47.9 versus 48.2 prior, lower than the expectation. The output fell at the fastest rate for six months as the recent order book decline intensified. The Federal Reserve's (Fed) dovish stance after its December meeting dragged the USD lower across the board. However, the strength in the US economy might limit the greenback’s downside. The International Monetary Fund (IMF) forecasted the US economy to grow by 1.5% in 2024, compared to 1.2% for the eurozone and 4.2% for China.

Market players will closely watch the chance that the Bank of Japan (BOJ) will likely consider changing its monetary policy. The BOJ Governor Kazuo Ueda said on December 25, 2023, that the possibility of the central bank achieving the 2% inflation target sustainably and stably seems to be gradually rising.

Later on Wednesday, the final US ISM Manufacturing PMI report and the Fed’s latest Meeting Minutes will be released. The Japanese Jibun Bank Manufacturing PMI will be due on Thursday. Japan’s Jibun Bank Services PMI and Consumer Confidence will be due on Friday. The US Nonfarm Payrolls (NFP) will be a closely watched event and could keep a clear direction for the USD/JPY pair.