Next week's USD/JPY could rise toward the low ¥158 range depending on US CPI data, while downside movement could center around ¥157. Developments involving the Japanese and US finance authorities and expectations for Bank of Japan policy will also be key market focuses.
This week's USD/JPY remained within a range of 157.43–158.50 yen, approximately ¥1, and traded within the range anticipated previously. Against the backdrop of weaker-than-expected US employment data and movements in US long-term interest rates, the pair is expected to remain capped around the 200-day moving average near 158.54.
Next week's trading is expected to center on US CPI. If CPI comes in above expectations, upward pressure on the dollar could strengthen alongside a rise in US long-term interest rates. Conversely, if CPI falls short of expectations, USD/JPY could at times break below support in the low ¥157 range, while the following day's retail sales and PPI figures are expected to reinforce the direction.
Factors that could support the upside include comments from the Japanese and US finance authorities and the G20 meeting. At the G20 Finance Ministers and Central Bank Governors Meeting to be held in Bangkok on the 15th, contact between the Japanese and US finance authorities will be closely watched, and comments aimed at restraining yen depreciation could again act to cap the upside.
Regarding expectations for an additional Bank of Japan rate hike, the key question is whether inflation will be shown to have reached 2%. Depending on comments by government officials and the contents of the Outlook for Economic Activity and Prices report, the market is expected to remain prone to swings in the yen.