USD/JPY to find bids around 127.00 ahead of US GDP and PCE

• USD/JPY is declining modestly towards 127.00 as investors await US PCE and GDP.
• The annual US GDP is seen stable at -1.4% while the PCE is seen firmer at 7%.
• The yen bulls have delivered a decent performance this week on upbeat PMI numbers.

The USD/JPY pair has witnessed a minor correction after failing to cross 127.50 as investors are keeping an eye on the US Gross Domestic Product (GDP) numbers, which are due on Thursday. The annual GDP is seen stabled at -1.4%.

The asset has remained vulnerable in the past few trading sessions amid weakness in the US dollar index (DXY). The DXY has delivered a subdued performance from the last week after printing a 19-year high of 105.00 on May 13. Investors have dumped the greenback heavily at elevated levels amid a rebound in the risk-on impulse, which diminished the safe-haven appeal.

Consecutive 50 basis points (bps) interest rate elevation by the Federal Reserve (Fed) in June monetary policy is the talk of the town and it looks like investors have already priced in the extreme hawkish stance by the Fed.

Apart from the US GDP numbers, investors will also focus on the quarterly Core Personal Consumption Expenditure (PCE), which is also seen stabled at 7%. A higher-than-expected Core PCE figure could force the Fed to sound more hawkish than the current usual.

On the Japanese front, the yen bulls have performed better this week on upbeat Jibun Bank Purchase Managers Index (PMI) numbers. The Manufacturing PMI landed at 53.2, against the forecasts of 52 while the Services PMI was recorded at 51.7, higher in comparison with the estimates of 50.6.