Many market participants expect US economic data released in overseas markets later to attract attention, with USD/JPY likely to test lower levels. ADP employment, PCE and GDP data will be key.
In overseas markets later, attention will focus on releases including the MBA mortgage applications index, ADP employment, personal income and spending, the PCE price index, wholesale inventories, real GDP and the PMI as potential drivers for the dollar. Market attention is focused on US employment and inflation, which could also affect expectations for a rate hike at the next Federal Open Market Committee (FOMC) meeting.
The ADP employment report is expected to show a larger increase than the previous month's gain, while the PCE price index is forecast to remain elevated at +0.3% month on month and +3.7% year on year. Meanwhile, the Chicago PMI is expected to improve and may affect market sentiment. These factors could prompt changes in USD/JPY.
USD/JPY remains around the ¥157 level. Factors related to the yen include the Bank of Japan's government bond purchase plans and the release of foreign exchange intervention data. Some expect renewed speculation about government intervention to have an impact.
Crude oil prices and economic indicators from Europe, including releases from the UK and Germany, will also be market focuses this week. Falling crude oil prices and developments in European markets could affect sentiment toward the dollar.