Tag: Inflation

  • France Inflation ex-tobacco (MoM): 0% (February) vs previous 0.1%



    France Inflation ex-tobacco (MoM): 0% (February) vs previous 0.1%



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  • We don’t get a recursive Biden-flation

    We don’t get a recursive Biden-flation


    In an interview with Breitbart News Network on Friday, US Treasury Secretary Scott Bessent said, “we don’t get a recursive Biden-flation,” per Reuters.

    Further comments

    We’re very vigilant about inflation, it could happen again.

    Before we can bring down inflation, we also want to help affordability.

    As we bring down inflation, we want to bring the absolute price level down through deregulation and bringing down interest rates for house payments and car payments.

    Market reaction

    At the press time, the US Dollar Index (DXY) is trading 0.14% higher on the day to near 104.00.



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  • Consumers elected Trump to fix prices — his policies could do the opposit…

    Consumers elected Trump to fix prices — his policies could do the opposit…


    None



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  • Japanese Yen surrenders major part of intraday gains against USD; downside seems limited

    Japanese Yen surrenders major part of intraday gains against USD; downside seems limited


    • The Japanese Yen struggles to capitalize on its Asian session gains against a stronger USD. 
    • Firming expectations for more BoJ rate hikes this year should help limit losses for the JPY.
    • Traders now look forward to the release of the crucial US PCE data for a fresh impetus. 

    The Japanese Yen (JPY) surrenders its intraday gains against the broadly stronger US Dollar (USD) after Prime Minister Shigeru Ishiba’s government reduced the FY25/26 budget plan to ¥115.2 trillion. Apart from this, the broadly stronger US Dollar (USD) assists the USD/JPY pair in reversing the Asian session slide to the 149.00 neighborhood. Any meaningful JPY depreciation, however, seems elusive in the wake of hawkish Bank of Japan (BoJ) expectations.

    Investors seem convinced that the BoJ will hike interest rates further this year. The bets were reaffirmed by BoJ Deputy Governor Shinichi Uchida’s remarks, saying that the underlying inflation rate is gradually rising toward the 2% target. This offsets the softer Tokyo Consumer Price Index (CPI) print, which, along with the risk-off mood, should limit losses for the safe-haven JPY. The USD bulls might also opt to wait for the US Personal Consumption Expenditure (PCE) Price Index. 

    Japanese Yen bulls have the upper hand amid rising bets for more BoJ rate hikes this year

    • Japanese Prime Minister Shigeru Ishiba’s government announced that it reduced its FY25/26 Budget plan to ¥115.2 trillion. The government also said they will cut the new bond issuance to JPY28.6 trillion.
    • Bank of Japan Deputy Governor Shinichi Uchida said this Friday that Japan’s inflation rate is gradually rising towards the central bank’s 2% target as the economy sustains a moderate recovery path.
    • The Statistics Bureau of Japan reported that the headline Consumer Price Index (CPI) in Tokyo – Japan’s capital city – decelerated from 3.4% in the previous month to the 2.9% YoY rate in February. 
    • Meanwhile, core CPI – which excludes volatile fresh food prices – eased more than expected, from an 11-month high of 2.5% touched in January to the 2.2% YoY rate during the reported month. 
    • Furthermore, a core gauge that excludes both fresh food and energy prices, and is watched as a gauge of underlying inflation by the BoJ, came in at 1.9%, matching the previous month’s reading. 
    • Separately, Japan’s Industrial Production fell by 1.1% MoM in January. This follows a 0.2% decrease in the previous month and marks the third consecutive month of decline in industrial output.
    • Investors, however, seem convinced that the BoJ will hike interest rates further, which, along with the risk-off mood, boosts the safe-haven Japanese Yen during the Asian session on Friday.
    • The US Dollar stands firm near the weekly top in the wake of Thursday’s data, showing that inflationary pressures continue to rise and backing the case for the Federal Reserve to hold steady. 
    • The second reading of the US Gross Domestic Product showed that the economy expanded by a 2.3% annualized pace during the final quarter of 2024, matching the original estimate. 
    • Additional details of the report published by the US Bureau of Economic Analysis revealed that the GDP Price Index rose 2.4% compared to the initial estimate of 2.2%. 
    • This comes on top of worries that US President Donald Trump’s policies would reignite inflation and put additional pressure on the Federal Reserve to stick to its hawkish stance. 
    • Kansas City Fed President Jeff Schmid said that recent surveys indicate a rise in consumer inflation expectations and that the central bank must stay focused on fully containing price pressures.
    • Cleveland Fed President Beth Hammack noted on Thursday that interest rates are likely on hold for the time being as inflation data starts to pose a growing problem for central policymakers.
    • Philadelphia Fed President Patrick Harker noted that progress toward the 2% inflation target has slowed and that the policy rate remains restrictive to continue putting downward pressure on inflation.
    • Investors now look forward to the release of the US Personal Consumption Expenditure (PCE) Price Index for cues about the Fed’s rate-cut path, which will drive the buck and the USD/JPY pair. 

    USD/JPY needs to move beyond weekly high to support prospects for further gains

    From a technical perspective, spot prices remain confined in a familiar range held since the beginning of this week. Against the backdrop of the recent decline from the vicinity of the 159.00 mark, or the year-to-date high touched in January, the range-bound price action might still be categorized as a bearish consolidation phase. The negative outlook is reinforced by the fact that oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside and supports prospects for deeper losses.

    In the meanwhile, the 149.00 round figure now seems to protect the immediate downside ahead of the 148.60-148.55 region, or the multi-month low touched on Tuesday. Some follow-through selling will be seen as a fresh trigger for bearish traders and drag the USD/JPY pair to the 148.00 mark en route to the next relevant support near the 147.35-147.30 area and the 147.00 round figure.

    On the flip side, the 148.80 region, followed by the 150.00 psychological mark and the weekly high, around the 150.30 area, might continue to act as an immediate hurdle. A sustained strength beyond the latter, however, could trigger a short-covering rally and lift the USD/JPY pair further towards the 150.90-151.00 horizontal support breakpoint, now turned strong barrier. The momentum could extend further towards the 151.45 region en route to the 152.00 mark, though it is more likely to remain capped near the 152.40 zone. The latter represents the very important 200-day Simple Moving Average (SMA) and should act as a key pivotal point.

    Japanese Yen FAQs

    The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

    One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

    Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

    The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

     



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  • N. Macedonia Inflation Accelerates To 4.9%

    N. Macedonia Inflation Accelerates To 4.9%


    Consumer price inflation in North Macedonia climbed in January led by higher prices for food and transport, preliminary data from the statistical office showed Friday.

    The consumer price index rose 4.9 percent year-on-year following a 4.4 percent increase in December.

    Food prices increased 5.0 percent and transport costs grew 5.7 percent. Prices in the recreation and culture group rose 6.5 percent.

    Clothing and footwear prices rose 3.3 percent and utility costs grew 1.4 percent. Health costs climbed 3.9 percent.

    Prices rose 0.2 percent from the previous month, when they grew 0.3 percent.

    For comments and feedback contact: editorial@rttnews.com

    Economic News

    What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.





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  • China Consumer Price Index (YoY) above expectations (0.4%) in January: Actual (0.5%)



    China Consumer Price Index (YoY) above expectations (0.4%) in January: Actual (0.5%)



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  • UoM Consumer Sentiment Index drops as inflation fears climb

    UoM Consumer Sentiment Index drops as inflation fears climb


    According to the University of Michigan’s (UoM) Consumer Sentiment Index, American consumers are beginning to grow increasingly concerned about United States (US) President Donald Trump’s approach to economic policy and international trade. Trade war fears have knocked back consumer confidence, and consumer inflation expectations have also climbed.

    The Preliminary UoM Sentiment Index showed that aggregate consumer outlook contracted in January, falling to 67.8 compared to investors’ median forecasts of a climb to 71.8 from December’s 71.1. It’s the lowest reading in the UoM’s main sentiment index since July of last year, and the average US consumer may not be in as great shape or feeling as confident as Wall Street might have originally thought.

    UoM Consumer Inflation Expectations also rose across the board, climbing to 3.3% over the next 5 years and jumping to 4.3% over the next 12 months as multiple rounds of tariff threats take hold of the economy at the consumer level.



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  • Can’t ignore threats to supply chains like tariffs

    Can’t ignore threats to supply chains like tariffs


    Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee noted on Wednesday that it is difficult for central banks to generally estimate the fallout of things like tariffs, and could complicate the Fed’s ability to accomplish its task of bringing inflation down to 2%.

    Key highlights

    If inflation rises or progress stalls, US central bank will need to figure out if it’s from overheating or tariffs.

    Inflation has come down and is approaching Fed’s 2% goal.

    US has a strong economy and plausibly full employment.

    Distinguishing the cause of any inflation will be critical for deciding when or even if the Fed should act.

    COVID-19 pandemic experience shows supply chain disruptions can have a material impact on inflation.

    Ignoring potential consequences of new threats to supply chains, like tariffs, would be a mistake.

    Opinions differ widely on how much tariffs would get passed into prices, suppliers may have to eat the cost.

    Tariffs this time may be broader and higher than in 2018; impact could be larger and longer-lasting.



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  • EUR/USD slides as soft inflation in Germany’s six states validates ECB dovish bets

    EUR/USD slides as soft inflation in Germany’s six states validates ECB dovish bets


    • EUR/USD declines to near 1.0370 as inflation in six states of Germany decelerates in January.
    • Donald Trump threatens to impose 100% tariffs on BRICS and 25% on Mexico and Canada.
    • The Fed kept interest rates at their current levels on Wednesday.

    EUR/USD faces selling pressure and declines to near 1.0370 in Friday’s European session. The major currency pair declines as the Euro (EUR) weakens across the board amid a slowdown in inflationary pressures in six German states. Softer-than-expected Consumer Price Index (CPI) data for January boosts confidence that Eurozone price pressures are on track to return sustainably to the European Central Bank’s (ECB) desired rate of 2%, which will support the central bank in easing the monetary policy.

    On Thursday, ECB President Christine Lagarde showed confidence in announcing a victory over inflation this year in the monetary policy statement after the central bank reduced its Deposit Facility Rate by 25 basis points (bps) to 2.75%. In Friday’s European session, ECB policymaker and Estonian Central Bank chief Madis Muller also said that it is realistic for inflation to be near 2% “by the middle of this year”.

    Christine Lagarde’s comments at the press conference indicated that the ECB has kept the door open for further policy easing. Lagarde said that we are still in “restrictive territory” and it is premature to “anticipate at what point where will stop”. She avoided providing a pre-defined interest rate cut path and reiterated that we decide meeting by meeting based on data.

    Going forward, investors will focus on the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for January, which will be released on Monday.

    But before that, the preliminary German HICP data for January will be published at 13:00 GMT. However, the impact is expected to be limited, as the inflation data in six German states have already indicated the current status of price pressures.

    Euro PRICE Today

    The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   0.28% 0.14% 0.25% 0.04% 0.04% -0.08% 0.15%
    EUR -0.28%   -0.14% -0.05% -0.23% -0.23% -0.38% -0.12%
    GBP -0.14% 0.14%   0.10% -0.09% -0.11% -0.24% 0.01%
    JPY -0.25% 0.05% -0.10%   -0.21% -0.21% -0.37% -0.10%
    CAD -0.04% 0.23% 0.09% 0.21%   -0.02% -0.15% 0.10%
    AUD -0.04% 0.23% 0.11% 0.21% 0.02%   -0.14% 0.12%
    NZD 0.08% 0.38% 0.24% 0.37% 0.15% 0.14%   0.26%
    CHF -0.15% 0.12% -0.01% 0.10% -0.10% -0.12% -0.26%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

    Daily digest market movers: EUR/USD weakens as Trump’s tariff threats improve USD’s appeal

    • EUR/USD remains under pressure as the broader outlook of the US Dollar (USD) remains firm, with the US Dollar Index (DXY) wobbling around 108.20. The safe-haven appeal of the Greenback strengthens as United States (US) President Donald Trump reiterated his intentions of imposing hefty tariffs on his North American peers and BRICS on Thursday.
    • Donald Trump said on his social media platform, TruthSocial, that he requires a commitment from the BRICS that it will “neither create a new currency nor back any other currency” to replace the US Dollar. Trump threatened that any country tries should “face 100% tariffs”, and expect to say “goodbye to selling into the wonderful US economy.”
    • Market experts believe that Donald Trump is using tariff measures as a tool to fulfill his economic agenda, and the imposition of hefty tariffs will be inflationary for the US economy. Such a scenario would support the Federal Reserve (Fed) in holding its stance of keeping interest rates unchanged in the range of 4.25%-4.50% for longer.
    • On Wednesday, the Fed maintained the status quo and guided to remain in the waiting mode until the central bank sees any “real progress in inflation or some weakness in the labor market”.
    • Meanwhile, the next move in the US Dollar will be guided by the US Personal Consumption Expenditure Price Index (PCE) data for December, which will be published at 13:30 GMT. Economists expect monthly core PCE inflation to have grown at a faster pace of 0.2%, compared to a 0.1% increase in November. Year-on-year, core PCE is estimated to have grown steadily by 2.8%.

    Technical Analysis: EUR/USD returns below 20-day EMA

    EUR/USD declines to near 1.0370 in Friday’s European session, below the 20-day Exponential Moving Average (EMA) around 1.0390. The major currency pair resumed its correction after failing to sustain above the 50-day EMA, which trades around 1.0449 at the press time.

    The 14-day Relative Strength Index (RSI) faces barricades near 60.00. Such a scenario indicates that the recovery move was short-lived.

    Looking down, the January 20 low of 1.0266 and January 13 low of 1.0177 will act as major support for the pair. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.

     



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  • Pound Sterling slides as UK economy barely grow in November

    Pound Sterling slides as UK economy barely grow in November


    • The Pound Sterling drops as the UK GDP rose at a slower-than-expected pace, and factory activity contracted in November.
    • Traders have raised BoE dovish bets for February’s policy meeting.
    • Investors await the US weekly jobless claims and Retail Sales data for December on Thursday.

    The Pound Sterling faces selling pressure in Thursday’s North American session after the release of the United Kingdom’s (UK) monthly Gross Domestic Product (GDP) and factory data for November. The Office for National Statistics (ONS) reported that the economy returned to growth after contracting in October. However, the growth rate was slower than projected. The economy rose by 0.1% after declining at a similar pace in October. Economists expected the economy to have expanded by 0.2%.

    Both Manufacturing and Industrial Production data contracted in November on a monthly as well as annual basis. Month-on-month, Industrial and Manufacturing Production contracted by 0.4% and 0.3%, respectively. The pace of decline was slower than that seen in October. Economists expected Industrial Production to have grown by 0.1%, while Manufacturing Production was estimated to have remained flat.

    Signs of continuous weakness in the UK factory activity suggest that producers are not fully utilizing their operating capacity on the assumption that the already weak demand environment will worsen further after United States (US) President-elect Donald Trump slaps hefty import tariffs globally once he takes office.

    However, growing expectations that the Bank of England’s (BoE) monetary policy easing will be less gradual this year would offer some relief for factory owners. Traders have raised BoE dovish bets after the release of the UK Consumer Price Index (CPI) data for December on Wednesday, which showed signs of cooling price pressures.

    Traders see a roughly 84% chance that the BoE will reduce interest rates by 25 basis points (bps) to 4.5% at its policy meeting in February. For the entire year, economists expect four interest rate cuts, according to a Reuters poll.

    Cooling price pressures have offered some relief to Chancellor of the Exchequer Rachel Reeves as they led to a pause in the rally in yields on UK gilts. 30-year UK gilt yields have corrected to 5.28% from their more-than-26-year high of 5.47%. The British currency has faced a significant decline in the last few trading days as soaring UK gilt yields due to uncertainty over the economic outlook.

    British Pound PRICE Today

    The table below shows the percentage change of the British Pound (GBP) against listed major currencies today. The British Pound was the strongest against the Canadian Dollar.

      GBP EUR USD JPY CAD AUD NZD CHF
    GBP   -0.28% -0.29% -0.68% 0.00% -0.10% -0.07% -0.48%
    EUR 0.28%   -0.01% -0.40% 0.30% 0.19% 0.22% -0.20%
    USD 0.29% 0.00%   -0.41% 0.30% 0.19% 0.22% -0.20%
    JPY 0.68% 0.40% 0.41%   0.71% 0.58% 0.57% 0.20%
    CAD -0.01% -0.30% -0.30% -0.71%   -0.10% -0.08% -0.49%
    AUD 0.10% -0.19% -0.19% -0.58% 0.10%   0.03% -0.39%
    NZD 0.07% -0.22% -0.22% -0.57% 0.08% -0.03%   -0.41%
    CHF 0.48% 0.20% 0.20% -0.20% 0.49% 0.39% 0.41%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

    Daily digest market movers: Pound Sterling weakens against USD 

    • The Pound Sterling remains under pressure slightly below 1.2200 against the US Dollar (USD) in North American trading hours. The GBP/USD pair falls due to weak UK data. While, the US Dollar trades higher, with the US Dollar Index (DXY) wobbling around 109.30, but is likely to face selling pressure as the US Initial Jobless Claims data for the week ending January 10 remains higher-than-expected and the Retail Sales data rose moderately in December.
    • The US Department of Labor reported individuals claiming jobless benefits for the first time were 217K, higher than estimates of 210K and the prior release of 203K. Month-on-month Retail Sales data, a key measure of consumer spending, rose by 0.4%, slower than estimates of 0.6% and the former release of 0.8%. However, the Retail Sales rose at a faster pace of 3.9% than the prior reading of 3.8%.
    • Going forward, the US Dollar will be influenced by market expectations for the Federal Reserve’s (Fed) likely interest rate action for the entire year.
    • Market participants expect the Fed’s policy-easing path to be less gradual than anticipated earlier. Expectations for the Fed policy outlook were impacted after the release of the United States (US) inflation data for December on Wednesday, which showed that the progress in the disinflation trend has not stalled yet.
    • According to the CME FedWatch tool, traders expect the Fed to deliver more than one interest rate cut this year and anticipate the first reduction in June. Before December’s inflation data, traders were anticipating only one interest rate reduction in September.

    Technical Analysis: Pound Sterling stays below 1.2200

    The Pound Sterling trades near the key level of 1.2200 against the US Dollar on Thursday. The outlook for the Cable remains weak as the vertically declining 20-day Exponential Moving Average (EMA) near 1.2394 suggests that the near-term trend is extremely bearish.

    The 14-day Relative Strength Index (RSI) rebounds slightly after diving below 30.00 as the momentum oscillator turned oversold. However, the broader scenario remains bearish until it recovers inside the 20.00-40.00 range.

    Looking down, the pair is expected to find support near the October 2023 low of 1.2050. On the upside, the 20-day EMA will act as key resistance.

    Economic Indicator

    Consumer Price Index ex Food & Energy (YoY)

    Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

    Read more.

     



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  • Japanese Yen surrenders major part of intraday gains to multi-week top against USD

    Japanese Yen surrenders major part of intraday gains to multi-week top against USD


    • The Japanese Yen gains positive traction for the second straight day amid BoJ rate hike bets. 
    • The narrowing of the US-Japan yield differential provides an additional boost to the JPY. 
    • The risk-on mood caps the JPY and helps USD/JPY to rebound from a multi-week low. 
    • A modest USD uptick contributes to the pair’s bounce, though the upside seems limited.

    The Japanese Yen (JPY) trims a part of strong intraday gains against its American counterpart, lifting the USD/JPY pair back above the 156.00 mark heading into the European session on Thursday. Expectations that the Federal Reserve (Fed) could cut interest rates twice this year, along with easing fears about US President-elect Donald Trump’s disruptive trade tariffs, remain supportive of the risk-on mood. This turns out to be a key factor that undermines the safe-haven JPY and assists the currency pair in finding decent support ahead of the 155.00 psychological mark. 

    Apart from this, the emergence of some US Dollar (USD) dip-buying, bolstered by the growing acceptance that the Fed will pause its rate-cutting cycle later this month, offers support to the USD/JPY pair. That said, any meaningful JPY depreciation seems elusive amid bets for a Bank of Japan (BoJ) rate hike next week. The expectations push the yields on Japanese Government Bonds (JGBs) to multi-year highs. In contrast, the US Treasury bond yields retreated after benign US inflation data, narrowing the US-Japan yield-differential, which could further lend support to the JPY. 

    Japanese Yen trims a part of strong intraday gains amid the risk-on mood

    • Bank of Japan Governor Kazuo Ueda reiterated that the central bank will debate whether to hike rates next week and will raise policy rate this year if economic, price conditions continue to improve. 
    • Ueda’s remarks echoed Deputy Governor Ryozo Himino’s comments earlier this and lift bets for an interest rate hike at the end of the January 23-24 meeting, providing a strong boost to the Japanese Yen. 
    • The yield on the benchmark 10-year Japanese government bond advanced to its highest level since 2011 amid the prospects for further monetary policy tightening by the BoJ. 
    • In contrast, the US Treasury bond yields fell on Wednesday following the release of the US Consumer Price Index (CPI), which eased fears that inflation was accelerating.
    • The US Bureau of Labor Statistics (BLS) reported that the headline CPI rose 0.4% in December and the yearly rate accelerated to 2.9% from 2.7% in the previous month. 
    • The core gauge, which excludes volatile food and energy prices, rose 3.2% on a yearly basis as compared to the 3.3% increase recorded in November and expectations. 
    • The US Dollar dived to a one-week low following the release of the latest US consumer inflation figures and contributed to the USD/JPY pair’s decline on Wednesday. 
    • Richmond Fed President Tom Barkin said that fresh inflation data show progress on lowering inflation to the central bank’s 2% goal, but added that rates should remain restrictive.
    • Against the backdrop of easing fears about US President-elect Donald Trump’s disruptive trade tariffs, softer US inflation data remains supportive of the upbeat market mood.
    • Traders look to the US macro data for a fresh impetus later during the North American session, though the focus will remain glued to the upcoming BoJ policy meeting.

    USD/JPY recovery is likely to face stiff resistance near the 156.35-156.40 area

    Any further slide is likely to find some support near the 155.00 psychological mark, below which the USD/JPY pair could slide to the 154.55-154.50 region. The latter represents the lower boundary of a four-month-old upward-sloping channel and should act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for an extension of the recent retracement slide from a multi-month peak touched last Friday. Spot prices might then weaken further below the 154.00 mark and test the next relevant support near the 153.40-153.35 horizontal zone. 

    On the flip side, any attempted recovery might now confront resistance near the 156.00 mark ahead of the 156.35-156.45 region and the 156.75 area. Some follow-through buying, leading to a subsequent strength beyond the 157.00 mark, might shift the bias back in favor of bullish traders and lift the USD/JPY pair to the 155.55-155.60 intermediate hurdle en route to the 158.00 round figure. The momentum could extend further towards challenging the multi-month peak, around the 158.85-158.90 region.

    Fed FAQs

    Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

    The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

    In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

    Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

     



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