The US Jobs Report that was released on June 7 had a significant impact on the USD/JPY, pushing it closer to the 157 level. Following this, the focus has now shifted to the upcoming US CPI Report, which could potentially lead the Bank of Japan to engage in more substantial discussions regarding bolstering the Japanese Yen. The inflation figures from the US CPI Report are crucial as they could influence the stance of FOMC hawks in maintaining interest rates steady in 2024.
The labor market data that exceeded expectations on Friday indicates a positive sign for the economy. With average hourly earnings increasing by 4.1% year-on-year in May, there is a potential for higher wages to boost disposable income for individuals. This could result in an upsurge in consumer spending and demand-driven inflation.
The Federal Reserve is expected to leave interest rates unchanged at 5.50% in the upcoming meeting. However, there are speculations of a potential rate hike in September despite the recent US Jobs Report. The decision by the Fed will have a significant impact on the USD/JPY trends in the near term, as well as influence the Bank of Japan’s strategy.
From a technical analysis perspective, the USD/JPY has held above both the 50-day and 200-day Exponential Moving Averages (EMAs), signaling bullish price trends. If the USD/JPY manages to return to the 157 level, it could pave the way for a move towards the key level of 158.209. On the other hand, a breach below the 50-day EMA could potentially lead to a decline towards the support level of 151.685.
Following the release of the Q1 2024 GDP Report, it is essential to pay attention to the statements and guidance provided by the Bank of Japan. Any indications or signals regarding potential rate hikes could impact the USD/JPY movements in the coming weeks.
The US Jobs Report has set the stage for a series of economic events that will shape the USD/JPY trends in the short and medium term. Investors and traders need to closely monitor the US CPI Report, alongside the FOMC decisions and Bank of Japan’s policy stance for a comprehensive understanding of the currency pair’s movements.