USD/JPY is expected to trade in a range of ¥158.60–¥159.80 this morning. With the PCE deflator due, many expect the market's reaction to be limited as it awaits the Fed chair's speech.
USD/JPY edged higher yesterday and traded around its closing level. It briefly moved up to around ¥159.49 during Asian hours, but reports during European hours pointed to a further decline in oil prices, narrowing the dollar's gains. The market is watching price movements for clues from U.S. interest rates and developments in the Middle East.
Today's key indicator is the July PCE deflator, for which the market expects a year-on-year increase of +3.6%. However, some market participants believe that a rebound in oil prices could affect expectations for Fed rate hikes, depending on the actual result.
Market attention has shifted to the Fed chair's speech at the Jackson Hole meeting on 28 August, and there is strong interest in carefully assessing the chair's remarks. Many believe that a stronger or weaker-than-expected PCE deflator alone is unlikely to trigger one-sided dollar buying.
Information on the USD/JPY chart released this morning and a link to the full 外為どっとコム report are also included. The report notes that oil prices and U.S. interest rates could influence the market's reaction.