FX Empire on Nostr: USD/JPY Forecast: Yen Volatility with Japan’s GDP and US Inflation in Focus ...

USD/JPY Forecast: Yen Volatility with Japan’s GDP and US Inflation in Focus
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The USD/JPY gained 0.09% in an action-packed weak that included a carry trade unwind and a slide to 141.684. Inflation and GDP numbers from Japan could influence the Bank of Japan rate path and USD/JPY trends. US inflation, labor market, and retail sales figures will impact Fed rate cut bets and interest rate differentials between the US and Japan. Bank of Japan Deputy Governor Uchida Shinichi held a press conference assuring the markets of no near-term rate hikes because of current market conditions. On Tuesday, August 13, producer prices will impact the USD/JPY. Economists forecast producer prices to increase by 3.0% year-on-year in July, up from 2.9% in June. On Thursday, August 15, preliminary GDP numbers for Q2 2024 will draw investor interest. Economists expect Japan’s economy to expand by 0.5% in Q2 2024 after a 0.5% contraction in Q1 2024. Rising producer prices and an improving macroeconomic backdrop would boost expectations of a Q4 2024 BoJ rate hike. Bloomberg Asia Pacific Chief Markets Editor David Ingles shared a chart on recent Yen volatility, stating, “What a week in Japan. To underscore how wild the market’s behaved recently, the only other two times stock swings were comparable was during the global financial crisis (green) and during the early 90s bubble burst (red).” On Tuesday, August 13, economists expect producer prices to increase by 0.1% in July, following a rise of 0.2% in June. On Wednesday, August 14, the US CPI Report will be a crucial data release. Economists forecast the annual core inflation rate to fall from 3.3% in June to 3.2% in July. On Thursday, August 15, jobless claims data will influence sentiment toward the US economy and the Fed rate path. Economists forecast initial jobless claims to fall from 233k in the week ending August 3 to 232k in the week ending August 10. On Thursday, US retail sales will also need consideration. Economists expect retail sales to increase by 0.3% in July after stalling in June. On Friday, August 16, US consumer confidence will spotlight the US economy. Economists expect the Michigan Consumer Sentiment Index to increase from 66.4 in July to 66.7 in August. FOMC member Michelle Bowman commented on inflation, the labor market, and the Fed rate path, stating, “I am not confident that inflation will decline in the same way as in the second half of last year. Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment.” Near-term USD/JPY trends hinge on inflation numbers from Japan and the US, and US labor market data. Softer US inflation and labor market data could fuel bets on multiple 2024 Fed rate cuts and push the USD/JPY below 145. Moreover, higher producer prices and private consumption numbers from Japan could raise bets on a Q4 2024 BoJ rate hike and signal a USD/JPY drop toward 140.

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https://www.fxempire.com/forecasts/article/usd-jpy-forecast-yen-volatility-with-japans-gdp-and-us-inflation-in-focus-1452752