The Bank of Japan monetary policy meeting minutes for the March meeting are set to be released on Thursday, May 2. While the minutes are dated, they could provide insight into the requirements for raising interest rates in the future. With the USD/JPY hovering around the 158 level, investors will closely monitor any comments from the Bank of Japan and the Japanese government. Intervention chatter could also sway near-term trends.
Looking at US economic indicators, the Dallas Fed Manufacturing Index will be in focus on Monday, April 29. A positive surprise in the figures could boost confidence in the US economy and potentially impact the Fed rate path. Similarly, employment costs and consumer confidence numbers on Tuesday, April 30, could sway investor expectations. Higher-than-expected wages could lead to increased disposable income, driving consumer spending and demand-driven inflation.
Wednesday, May 1, will bring attention to the US labor market, with economists predicting growth in employment and a decline in JOLTs Job Openings for March. Better-than-expected data could support wage growth and drive disposable income higher. Additionally, the ISM Manufacturing PMI will provide insights into the sector’s performance, although it contributes less than 30% to the US economy.
On Thursday, May 2, investors will turn their focus to initial jobless claims, unit labor costs, and nonfarm productivity numbers. Forecasts suggest a slight increase in jobless claims, along with rising unit labor costs and moderate productivity growth. These factors could influence market sentiment about the Fed rate path.
The US Jobs Report on Friday, May 3, will be a key event, with expectations for growth in average hourly earnings and nonfarm payrolls. Stronger-than-expected figures could impact investor views on a potential Fed rate cut in the future. Additionally, the ISM Services PMI for April will offer insights into the largest sector of the US economy, impacting inflation expectations.
The Federal Reserve is expected to maintain interest rates at 5.50% on Wednesday, May 1. The FOMC press conference will be closely watched for clues about the Fed’s outlook on inflation and the rate path. Any hawkish comments could drive up demand for the USD/JPY. The currency pair has been trading above key moving averages, indicating a bullish trend.
While a break above the 158.5 handle could push the USD/JPY towards 160, a drop below 155 could lead to a test of key support levels. The overbought RSI at 87.61 suggests selling pressure may intensify at higher levels. Monitoring intervention chatter and economic data releases will be crucial in determining near-term trends for the USD/JPY pair.