USD/JPY clings to mild gains below 145.00 on mixed Japan data, intervention fears

• USD/JPY grinds near intraday high, reverses previous day’s pullback from eight-month high.
• Treasury bond yields remain sidelined, S&P500 Futures struggle amid dicey markets.
• BoJ Tankan survey defends easy-money policy, Japan PMI weakens for June.
• US ISM Manufacturing PMI, risk catalysts eyed for clear directions.

USD/JPY seesaws around 144.60 as it seeks fresh clues to defend intraday gains amid a sluggish start to another key trading week. In doing so, the Yen pair reverses the previous day’s retreat from the highest levels since November 2022 amid mixed risk catalysts and downbeat Japan data.

Japan’s Tankan Manufacturing Survey for the second quarter (Q2) of 2023 appears to defend the Bank of Japan’s (BoJ) dovish monetary policy bias as it expects easy inflation. Also likely to have weighed on the USD/JPY price could be the downbeat prints of Japan’s final prints of Jibun Bank Manufacturing PMI for June, to 49.8 as it matches the initial forecasts.

Also read: Japan firms expect CPI to rise 2.6% a year from now – BoJ Tankan Survey

Elsewhere, the market’s fears of Japan's intervention recede after the Yen pair retreated from 145.07 the previous day. However, the mixed headlines about China and the cautious mood ahead of this week’s top-tier data/events, comprising the Federal Open Market Committee (FOMC) Monetary policy meeting Minutes and the US jobs report, also prod the USD/JPY bulls.

It’s worth noting that the US Treasury Secretary Janet Yellen’s China visit during July 06-09 period witnessed mixed responses from the market. While the news appears positive for the sentiment on the front, the details seem less impressive as US Treasury Secretary Yellen is likely to flag concerns about human rights abuses against the Uyghur Muslim minority, China's recent move to ban sales of Micron Technology memory chips, and moves by China against foreign due diligence and consulting firms, per Reuters.

On the other hand, the Federal Reserve’s (Fed) preferred inflation gauge, namely US Personal Consumption Expenditure (PCE) Price Index, for May, came in at 0.3% MoM and 4.6% YoY versus market expectations of reprinting the 0.4% and 4.7% figures for monthly and yearly prior readings. With this, the key inflation numbers marked the smallest yearly gain in six months. Further, the Personal Consumption Expenditure (PCE) Price for Q1 2023 eased to 4.1% QoQ from 4.2% expected and prior whereas the Pending Home Sales slumped to -2.7% MoM for May compared to 0.2% expected and -0.4% prior (revised). Hence, the cooling of spending and easy inflation challenge Fed Chair Jerome Powell’s support for “two more rate hikes in 2023” and prod the USD/JPY buyers.

Amid these plays, S&P500 Futures fail to trace the upbeat Wall Street performance whereas the US Treasury bond yields struggle of late.

Moving on, the US ISM Manufacturing PMI for June will join the risk catalysts to direct intraday moves but major attention will be given to Fed Minutes and US Nonfarm Payrolls (NFP) report for a clear guide.

Technical analysis

USD/JPY remains on the bull’s radar unless breaking the 143.90 trend line support, comprising the bottom line of a one-month-old rising trend channel.