Ahead of the U.S. August PPI release, USD/JPY is expected to trade from the upper ¥152s to ¥154, while attention is also focused on the ECB Governing Council meeting.
The U.S. August Producer Price Index (PPI) is expected to be released tonight, with the year-on-year increase forecast at +5.3% and core PPI, excluding food and energy, forecast at +4.6%. The previous figures were +4.7% and +4.2%, respectively, but growth is expected to accelerate. While the possibility of a rate hike at the FOMC is also being watched, the CPI release is attracting the most attention as the final major piece of information ahead of the meeting.
Trading in USD/JPY was mixed in the Tokyo market. The pair strengthened to around ¥153.74 after the Tokyo fixing, but downside remained limited, partly due to higher crude oil prices. During overseas trading hours, market participants are expected to continue assessing the impact of tonight’s PPI and next week’s CPI.
The ECB policy rate outlook is also attracting attention tonight. Events of interest include a speech by ECB President Lagarde at 21:45. Following the U.S. August PPI release, the trading range is expected to be broadly around ¥152.6–154.4, and the pair may be prone to encountering resistance in the ¥154 range.
Other events attracting attention include the ECB Governing Council decision, U.S. initial jobless claims and U.S. July existing home sales. Several factors could affect the market simultaneously tonight.