Japanese yen slides ahead of Core CPI, Jackson Hole

The US dollar has rebounded today after a nasty slide against the yen. In the North American session, USD/JPY is trading at 146.45, up 0.83% on the day. The yen had been a tear, gaining 2.7% since Friday.

Fed minutes signal a September hike

Wednesday’s FOMC minutes from the July meeting reaffirmed that the Fed will deliver its first rate cut in over four years at the Sept. 18 meeting. Most of the Fed officials at the meeting favored reducing rates next month, provided that the data “continued to come in about as expected”. The extent of the expected cut remains uncertain, with around a 75% likelihood of a 25-basis point hike and about a 25% chance of a 50-bps hike.

Markets eagerly await Powell’s Jackson Hole speech

The annual Jackson Hole symposium has often been a sleeper event but there is plenty of excitement ahead of this year’s meeting. The Federal Reserve is poised to deliver a historic rate cut and more cuts could follow before the end of the year. Investors will be hoping that Powell provides some clues about what the Fed has planned in the next few months. Powell is sure to touch on inflation and the labor market, the two key factors in the Fed’s rate path, and his take on the strength of the US economy could affect the movement of the US dollar.

In Japan, inflation has been moving higher and core CPI, which excludes fresh food but includes fuel, has accelerated for two straight months. The index is projected to rise again in July to 2.7%, up from 2.6% a month earlier. If inflation continues to move higher, it would support the case for the Bank of Japan raising rates at the Sept. 20 meeting.
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USD/JPY Technical

• USD/JPY pushed past resistance at 145.55 and is putting pressure on resistance at 146.63
• 144.19 and 143.11 are providing support

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