The government supports an early rate hike to maintain the effects of coordinated intervention by Japan and the United States, and the Bank of Japan is reportedly considering a hike in September or October. USD/JPY may move to test ¥160.
In its 14 August edition of Today, 外為どっとコム reported that the government supports an early rate hike to maintain the effects of coordinated intervention by Japan and the United States, while the Bank of Japan is considering a hike at its September or October Monetary Policy Meeting, according to several sources. As a result, market attention is focused on both the Bank of Japan’s pace of rate hikes and the timing of rate hikes by the Federal Reserve in determining the direction of USD/JPY.
The article cited the slowdown in U.S. PPI as a market development on 13 August, reporting that U.S. July PPI came in below expectations at +4.7% year on year, while core PPI slowed to +4.2% year on year. It also noted that the dollar’s decline was limited before and after the release of U.S. economic data.
Today’s expected USD/JPY range is ¥158.800–¥160.200, and the pair may move to test ¥160 depending on the release of U.S. retail sales data. The impact of the government reports is currently considered limited, while the market is pricing in the timing of a Bank of Japan rate hike.