The USD/JPY pair is experiencing a decline towards the key psychological level of 140.00 during the European session. This downward movement is a result of the weakness observed in the US Dollar Index (DXY), which has undergone a significant correction and is now hovering around 101.70. Investors are anticipating that the Federal Reserve (Fed) may soon reach the peak of its interest rate adjustments, leading to a sell-off in the USD/JPY pair.
In terms of market sentiment, S&P500 futures are displaying choppy movements as investors await the release of the United States Consumer Price Index (CPI) data for further guidance. Additionally, the upcoming second-quarter earnings season has left investors uncertain, as they consider the impact of higher interest rates from the Fed and the tight credit conditions set by commercial banks on corporate earnings.
Preliminary reports indicate that headline inflation is expected to cool down significantly, while core CPI is projected to show a moderate softening. Fed policymakers have been closely monitoring core price pressures, particularly as service inflation has not shown significant deceleration. The strong labor market, characterized by higher wages and sustained retail demand, has played a role in maintaining these price pressures.
In a recent speech at the University of San Diego, Cleveland Fed President Loretta Mester acknowledged that the economy has displayed more underlying strength than anticipated earlier in the year. She also highlighted the stubbornly high inflation levels and the stalled progress on core inflation.
On the Japanese Yen front, economists at Rabobank have analyzed potential scenarios for the Bank of Japan's (BoJ) July interest rate policy. While steady policy seems to be the most likely outcome for the July policy meeting, there is an expectation of upgraded inflation forecasts. Market participants will be watching for any signals from the BoJ regarding potential adjustments to Yield Curve Control (YCC). Speculation about a possible tweak to YCC could provide some support for the Japanese Yen ahead of the BoJ meeting later this month.
In terms of market sentiment, S&P500 futures are displaying choppy movements as investors await the release of the United States Consumer Price Index (CPI) data for further guidance. Additionally, the upcoming second-quarter earnings season has left investors uncertain, as they consider the impact of higher interest rates from the Fed and the tight credit conditions set by commercial banks on corporate earnings.
Preliminary reports indicate that headline inflation is expected to cool down significantly, while core CPI is projected to show a moderate softening. Fed policymakers have been closely monitoring core price pressures, particularly as service inflation has not shown significant deceleration. The strong labor market, characterized by higher wages and sustained retail demand, has played a role in maintaining these price pressures.
In a recent speech at the University of San Diego, Cleveland Fed President Loretta Mester acknowledged that the economy has displayed more underlying strength than anticipated earlier in the year. She also highlighted the stubbornly high inflation levels and the stalled progress on core inflation.
On the Japanese Yen front, economists at Rabobank have analyzed potential scenarios for the Bank of Japan's (BoJ) July interest rate policy. While steady policy seems to be the most likely outcome for the July policy meeting, there is an expectation of upgraded inflation forecasts. Market participants will be watching for any signals from the BoJ regarding potential adjustments to Yield Curve Control (YCC). Speculation about a possible tweak to YCC could provide some support for the Japanese Yen ahead of the BoJ meeting later this month.
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