The Japanese Yen (JPY) is currently soft, declining 0.2% against the US Dollar (USD) and showing middle-of-the-pack performance among G10 currencies, as reported by Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret.
Key Market Observations:
- Muted GDP Reaction: Markets have shown little significant reaction to Japan’s Q3 GDP data, which, despite a better-than-expected preliminary contraction of 1.8% QoQ (versus an expected -2.4%), failed to spur a strong response.
- Upcoming CPI Data: The key focus for the week will be Friday’s CPI data, with both headline and core inflation anticipated to remain around 3.0%.
- BoJ Outlook and Rate Hike Timing: While the Bank of Japan (BoJ) maintains a hawkish outlook, interest rate markets are pushing back the expected timing of a hike. A December hike is now priced at only 8 basis points (bpts), with January at 18 bpts.
USD/JPY Technicals:
- Bullish Bias: The technical indicators for USD/JPY are bullish, with the Relative Strength Index (RSI) in the mid-60s.
- Resistance Levels: Near-term resistance has been identified around 155, with additional resistance projected at 157.50.
