Japanese Yen Talking Points
USD/JPY[1] appears to be stuck in a narrow range as it struggles to push back above the 50-Day SMA (110.16), and the exchange rate may continue to consolidate ahead of the Kansas City Fed Economic Symposium scheduled for August 26 – 28 amid the ongoing weakness in longer-dated US Treasury yields.
USD/JPY Rate Struggles to Clear 50-Day SMA Ahead of Fed Symposium
USD[2]/JPY[3] largely mimic the behavior in US yields as it tracks the monthly range, but the Fed symposium may shake up foreign exchange markets a growing number of central bank officials[4] show a greater willingness to scale back monetary support.
Chairman Jerome Powell and Co. may utilize the event at Jackson Hole, Wyoming to highlight an imminent shift in monetary policy as most Fed officials “judged that the standard set out in the Committee's guidance regarding asset purchases could be reached this year,” with a few participants noting that “monetary policy had limited ability to address the labor supply shortages and hiring difficulties currently constraining the level of employment.”
The minutes from the July meeting suggest the Federal Open Market Committee[5] (FOMC) is on track to adjust the forward guidance as “some participants suggested that it would be prudent for the Committee to prepare for starting to reduce its pace of asset purchases relatively soon,” and a batch of hawkish rhetoric may spark a bullish reaction in the US Dollar[6] as it fuels speculation of seeing a potential exit strategy at the next Fed interest rate decision on September 22.
At the same time, more of the same from Chairman Powell and Co. may drag on USD/JPY as the FOMC braces for a transitory rise in
