Japanese Yen Talking Points
USD/JPY pulls back from a fresh weekly-high (110.49) as the updates to the U.S. Consumer Price Index (CPI) instill a mixed outlook for the real economy, and the dollar-yen[1] exchange rate may continue to consolidate ahead of the Federal Open Market Committee (FOMC) interest rate decision on June 13 as market participants weigh the outlook for monetary policy.
USD/JPY Advance Stalls Ahead of FOMC as U.S. CPI Fails to Impress
Despite the uptick in both the headline and core CPI, a deeper look at the report showed Average Hourly Earnings holding flat in May, with Average Weekly Earnings narrowing to 0.3% from 0.4% in April.
Signs of subdued wage growth may impede on the Federal Reserve’s hiking-cycle as ‘market-based measures of inflation compensation remain low,’ and the central bank may soften its hawkish tone throughout the second-half of the year as ‘inflation on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term.’
With that said, the U.S. dollar[2] stands at risk of facing a more bearish fate if the FOMC[3] may merely stick to the current script, and ongoing projections for a neutral Fed Funds rate of 2.75% to 3.00% is likely to produce headwinds for the U.S. dollar as market participants scale back bets for four rate-hikes in 2018. For more insight, sign up and join DailyFX Currency Analyst David Song LIVE[4] for a preview of the FOMC interest rate decision.
USD/JPY Daily Chart
- USD/JPY appears to be making a run at the May-high (111.40) as breaks the monthly opening range, with the Fibonacci overlap around
