The Japanese Yen (JPY) has continued its upward trajectory against the US Dollar (USD) in the wake of the latest Jibun Bank Services PMI data released on Wednesday. The index, revised to 53.7 in August from an initial estimate of 54.0, signifies the seventh consecutive month of expansion in the service sector, although the figure remains unchanged from July.
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi expressed vigilance in monitoring both domestic and international market developments, emphasizing the need for coordinated fiscal and economic policy management with the Bank of Japan (BoJ). Hayashi refrained from commenting on daily stock fluctuations, focusing on a calm assessment of market movements.
Meanwhile, the US Dollar remains stable as traders exercise caution ahead of the release of US employment data, particularly the August Nonfarm Payrolls (NFP) report. This data is anticipated to offer insights into potential Federal Reserve (Fed) rate cuts.
Market Update: Japanese Yen Gains Momentum Amid BoJ Sentiment
- The US ISM Manufacturing PMI increased to 47.2 in August from 46.8 in July, falling short of market expectations. This marks the 21st contraction in US factory activity over the past 22 months.
- Japan unveiled plans to allocate ¥989 billion for energy subsidies in response to escalating energy costs and cost-of-living pressures.
- US Personal Consumption Expenditures (PCE) Price Index rose by 2.5% year-over-year in July, slightly below the estimated 2.6%. Core PCE, excluding food and energy prices, also increased by 2.6% year-over-year.
- Tokyo’s Consumer Price Index (CPI) rose to 2.6% year-on-year in August, with an uptick in core CPI to 1.6% YoY. However, Japan’s Unemployment Rate unexpectedly climbed to 2.7% in July.
- Federal Reserve Bank of Atlanta President Raphael Bostic hinted at potential rate cuts, citing cooling inflation and a higher unemployment rate. Bostic’s stance was rated as neutral by FXStreet’s FedTracker.
- US GDP grew at a rate of 3.0% in Q2, surpassing expectations. Initial Jobless Claims fell to 231,000 for the week ending August 23.
- Japan’s Finance Minister Shunichi Suzuki highlighted various factors influencing foreign exchange rates, including monetary policies, interest differentials, and geopolitical risks.
Technical Analysis: USD/JPY Trending Bearish, Support Levels Identified
USD/JPY is currently trading near 145.40, with the daily chart indicating a bearish trend as the nine-day Exponential Moving Average (EMA) remains below the 21-day EMA. The 14-day Relative Strength Index (RSI) below 50 further confirms the bearish sentiment.
Key support levels for USD/JPY include the seven-month low of 141.69 and a subsequent level near 140.25. Resistance levels are identified at 145.63 and 146.73, with a potential move towards 150.00 if the pair breaches the resistance.
USD/JPY: Daily Chart
Japanese Yen Performance Against Major Currencies Today
The table below illustrates the percentage change of the Japanese Yen (JPY) against major currencies, with the Yen showing strength against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | 0.00% | -0.03% | -0.12% | 0.11% | 0.07% | -0.18% |
Japanese Yen FAQs
What Determines the Value of the Japanese Yen?
The value of the Japanese Yen is influenced by factors such as the performance of the Japanese economy, the Bank of Japan’s policies, yield differentials, and risk sentiment among traders.
Analysis Summary
The Japanese Yen has strengthened against the US Dollar following positive economic data and market sentiments. Japan’s focus on coordinated policy management and the US Dollar’s caution ahead of key employment data have shaped currency movements. Technical analysis suggests a bearish trend for USD/JPY, with identified support and resistance levels. Understanding these factors can help individuals make informed decisions about their investments and financial strategies.