USDJPY drops 0.22% to 142.81 amid mixed economic indicators from Japan and the U.S.

USDJPY Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.22%	-31 Pips
Week to-date	1.42%	200.301 Pips
September	-1.45%	-209.7 Pips

Upcoming key events (London Time)

Fri 04:00 AM JPY Bank of Japan Short-Term Policy Interest Rate

What happened lately

In Japan, several key economic indicators showed mixed results for August. The National Consumer Price Index (CPI) inflation rate excluding food and energy increased slightly to 2%, up from 1.9% in July, according to the Statistics Bureau of Japan. Additionally, the inflation rate excluding fresh food rose to 2.8%, marginally up from 2.7% the previous month. The overall National CPI inflation rate saw a more marked rise to 3%, from 2.8% in July. However, on the trade front, Japan showed signs of slowing growth. The 12-month export growth rate fell sharply to 5.6%, down from a revised 10.2% in July, as reported by the Ministry of Finance Japan. Likewise, the 12-month import growth rate dropped significantly to 2.3%, from 16.6% in July. Consequently, Japan’s merchandise trade balance worsened, with the total trade balance declining to -695.3¥ from a revised -628.7¥ in July.

The United States exhibited a mix of positive and negative economic indicators. The Philadelphia Fed reported that the U.S. Manufacturing Business Outlook Survey jumped to 1.7 points in September, from -7 points in August, signaling improvement in the manufacturing sector. Weekly initial unemployment insurance claims decreased to 219K for the week ending 14 September, down from a revised 231K, as per the Department of Labor. On the housing front, the Census Bureau noted increases in both building permits and housing starts for August, with permits rising to 1.475 million and housing starts to 1.356 million, both up from revised July figures. Despite these improvements, the Federal Reserve lowered its interest rate projections significantly, with projections for the next year falling to 3.4% from 4.1%, and the Federal Funds Rate was cut to 5% from 5.5%, indicating a more dovish monetary policy stance.

The recent economic data from both Japan and the U.S. has implications for the USDJPY currency pair. Japan’s increasing inflation rates contrasted by weaker trade figures suggest mixed economic health. Meanwhile, the U.S. showed strong economic indicators in manufacturing and housing but with a dovish shift in monetary policy. Lower interest rate projections and the Fed’s recent rate cut could weaken the USD as lower rates generally diminish investor returns on U.S. financial assets. Given the data, the USDJPY pair’s dip to 142.81 reflects these dynamics, indicating potential further weakening of the USD against the JPY, especially if upcoming Japanese economic policies, such as the Bank of Japan’s short-term policy interest rate decision, provide additional support for the Yen.

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What can we expect from USDJPY today?

USDJPY on Thursday dropped -0.22% to 142.81. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for USDJPY looks mixed as the pair is likely to consolidate above 141.92 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 143.94 or trades above daily pivot 142.93. While to the downside, the daily low of 142.03 and 141.92 (S1) as immediate support levels. USDJPY need to break on either side to indicate a short-term bias. A close below 142.03 would indicate selling pressure.

For the week to-date, take note that USDJPY is mixed as compared to prior week.

Key levels to watch out: