The USD/JPY is struggling to stay above 115.00 and is now down 0.24% at 114.55 in the New York session. As far as the mood is concerned, the marketplace is a mixed bag, with European equities oscillating between gainer and loser status.
As of press time, futures for the S&P 500 are trading in the negative, indicating that investors are concerned about the Federal Reserve’s raising interest rates sooner than expected in response to strong economic statistics.
USD/JPY CHART Source: Tradingview.com
A push towards 115.00 was made by the Dollar against the Yen during overnight trading. Although it had the ability to overcome heavy opposition, it was unable to do so. The market was forced to retreat towards Wednesday’s daily primary equilibrium position at 114.57, where it received some buying momentum, allowing it to surge to the 114.70 range.
The Dollar Index: After Holding 95.90, USD Bulls Aim For 96.00
Between now and July 2022, a month after the Federal Reserve ceases purchasing assets, money market contracts have completely factored in a 25-basis point rate rise by the United States central bank. Following a 30-year surge in the Consumer Price Index (CPI) in the United States, investors are confident that the Federal Reserve will have to move quickly in order to keep rising prices in the bond market from mirroring it.
Furthermore, the 10-year US Treasury note yield increased one basis point to 1.64%, creating a headwind for the USD/JPY.
DXY CHART Source: Tradingview.com
The US Dollar Index, which evaluates the overall performance of the Greenback against a basket of its counterparts, remains unchanged for the day, trading at 95.90. The index is supported by the 10-year US Treasury note.
Conversely, on the macroeconomic side, the Japanese economic dossier shows that export growth has slowed to an eight-month low as appetite for automobiles has slowed as international production limitations have affected Japanese manufacturers, among other things.
Sources quoted by Reuters state that “while car manufacturers are planning “revenge production” in late Nov and Dec, clouds continue to hang over the industry—semiconductor shortfalls are expected to last through at least the end of the year. And no one knows whether car manufacturers’ plans to mitigate the effects of chip scarcities by trying to adjust their distribution networks will be successful.”
Housing statistics from the United States came in mixed, but it appears to have been overlooked by investors in the country’s economic calendar. The number of building permits issued in October increased to 1.65 million, well above the 1.638 million projected by experts. Housing starts, on the other hand, have slowed to 1.52 million, which is lower than the 1.576 million expected for the same time period.
As a result, the USD/JPY is heavily influenced by the movements of US bond rates, which operate as a tailwind for the pair. If the 10-year benchmark note remains constant, this might be a favorable development for Japanese yen bulls, resulting in a downward movement in the pair. Nonetheless, USD bulls appear to be taking a breather before mounting an attack on the 115.00 level.