Monday, May 29, 2023
HomeUncategorizedUSD/JPY extends recovery above 136.60 as investors turn to safety ahead of...

USD/JPY extends recovery above 136.60 as investors turn to safety ahead of Jackson Hole incident

  • USD/JPY has firmly breached the immediate barrier of 136.60 as DXY rose.
  • The Fed will continue to accelerate the pace of interest rate hikes.
  • To move to a neutral stance, the BOJ also needs to raise wage rates in line with price pressures.
The USD/JPY pair has broken above the Tokyo session at 136.40 -136.56 narrow range consolidation. The asset extended gains after breaking the immediate 136.60 mark as investors turned back to the U.S. dollar index (DXY) ahead of the Jackson Hole Economic Symposium.

Market participants are turning to risk aversion amid uncertainty over comments by the leaders of the Jackson Hole global think tank. Federal Reserve Chairman Jerome Powell is still set to flash the traffic lights, as investors will get realistic clues on possible monetary policy action at the U.S. central bank’s September monetary policy meeting.

The Fed is likely to stick to its aggressive rate hike strategy as inflation remains above the staggering 8%. There is no doubt that Fed policymakers have evidence that price pressures are almost exhausted, but the whole inflation problem needs to be addressed soon. Therefore, more rate hikes will be discussed at the expense of a further slowdown in U.S. economic activity. Well, these are the consequences investors have had to experience due to the Fed’s slow response to rising inflationary pressures.

On Tokyo, as the Bank of Japan (BOJ) will stick to its prudent policy, the yen will rise even if inflation hits 3% fell further. The Bank of Japan’s prudent stance stems not only from subdued inflation, but also from a stagnant labor cost index. The Bank of Japan’s neutral stance could accelerate the economy’s troubles as it fails to raise wage rates.

The information on these pages involves risks and uncertainties. The markets and instruments described on this page are for informational purposes only and should not be taken as a recommendation to buy or sell these assets in any way. You should conduct your own thorough research before making any investment decision. FXStreet does not warrant in any way that this information is free of errors, errors or material misstatements. It also does not guarantee that the information is timely. Investing in public markets involves a number of risks, including loss of all or part of your investment, and emotional distress. All risks, losses and costs associated with investing, including the entire loss of principal, are borne by you. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of FXStreet or its advertisers. The author is not responsible for the information at the end of links published on this page.

Unless otherwise expressly mentioned in the text of the article, at the time of writing, the author is in any stock mentioned No positions are in this article and have no business relationship with any of the companies mentioned. Other than from FXStreet, the author did not receive any compensation for writing this article.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness or suitability of this information. FXStreet and the author shall not be liable for any errors, omissions or any loss, injury or damage arising out of this information and its display or use. Errors and omissions excluded.

The author and FXStreet are not registered investment advisors and nothing in this article is investment advice.



Please enter your comment!
Please enter your name here


Featured NEWS