Author: Sir Amar – Technical Analyst
Japan’s current account surplus shrank 63.1% year-on-year to 3.51 trillion yen ($25.9 billion) in the first half of 2022, impacted by a large goods trade deficit, largely due to higher oil prices and a weakening of the yen. weakness is due. The decline in the current account surplus was the second sharpest in half a year after the second half of 2008, when a global financial crisis sparked by the collapse of US securities firm Lehman Brothers Holdings Inc. The current account balance is one of the broadest indicators of international trade.
The dollar continued its best rally against the yen since mid-June on Monday, helped by higher Treasury yields after US jobs data raised expectations of more aggressive Fed policy tightening. The dollar rose 0.31% to 135.42 yen and previously rose to 135.585 yen, the highest since July 28, after rising 1.57% in the previous session. Traders currently see a 73.5% chance that the Fed will continue the pace of rate hikes by 75 basis points for its next policy decision on September 21st, from about 41% before surprisingly strong payrolls data on Friday raised worries that wage growth would fuel inflationary pressures.
US bond coupons took a cue from strong US jobs data to reflect the Fed’s aggressive bets and boost USD/JPY on Friday. The Nonfarm Payrolls headline rose to 528k versus 250k exp and 398k previously revised higher. In addition, the unemployment rate also fell to 3.5% from a previous and expected reading of 3.6%. Looking ahead, US Consumer Price Index (CPI) for July is the key data to watch this week, especially after the recent strong US jobs data for intraday moves, July Japan’s Eco Watcher Survey and Risk Catalysts could momentum- entertain dealers. Despite the recent pullback, USD/JPY is holding Friday’s breakout and a downward sloping trendline from July 21st around 135.00 and 134.60 respectively. However, upside momentum needs confirmation from 136.00 high.