The USD/JPY exchange rate rose for the fifth consecutive week ahead of several important economic data from the United States and the upcoming Bank of Japan (BoJ) interest rate decision. It soared to a high of 153.20, its highest level since July, and is about 10% higher than the lowest point in September.
US economic data ahead
The USD to JPY pair will react to several important economic data from the US, which will provide more information about the next actions by the Federal Reserve.
The first data will come out on Tuesday when the Conference Bureau publishes the latest consumer confidence report.
Analysts expect the data to show that confidence rose to 99 in October as inflation retreated and the labor market improved.
Consumer confidence is one of the most important economic numbers because of its implications on the economy. Highly confident consumers spend more money, boosting the economy, a notable thing since consumer spending is the biggest part of the US GDP.
The other important data will be released on Wednesday when ADP publishes the October private payroll data. Analysts see the numbers coming in at 101k, a big drop from the 143k it made last year.
After that, the US will publish the first estimate of the third quarter GDP data. Economists expect the numbers to reveal that the economy expanded by 3% last quarter, meaning that it is doing relatively well.
The most important data will be the US nonfarm payroll (NFP) data for October, which will come out on Friday. Economists polled by Reuters expect the data to show that the economy added 111k jobs this month, a big drop from the 254k it added in September.
The unemployment rate is expected to come in at 4.1%, while the average hourly earnings will increase by 4.0%.
These numbers will be important because of their impact on the Federal Reserve, which is considering what to do in its November 7 meeting. Analysts expect the bank to either maintain rates unchanged or cut by 25 basis points.
Crude oil price crashes
The USD/JPY pair also jumped as crude oil slumped by over 4.5% on Monday morning. Brent, the global benchmark, dropped by 4.35%, while West Texas Intermediate (WTI) fell by 4.36%.
Crude oil crashed after Israel launched a more modest retaliation attack than expected. It focused on Iran’s missile manufacturing plants, avoiding a more severe attack on its oil infrastructure and nuclear locations.
Iran also hinted that it will not have a severe retaliation since its economy is already ailing. Therefore, analysts believe that these tensions have now eased, meaning that oil supply will continue with no major interruptions.
The other important USD/JPY news is the upcoming US election, which will happen next week. Recent polling data shows that Donald Trump has an upper edge than Kamala Harris. For example, his lead on Polymarket has continued to widen in the past few months.
A Donald Trump win will be positive for the US dollar because of his focus on tariffs. Higher tariffs will likely to more geopolitical tensions and higher inflation in the US.
Bank of Japan interest rate decision
The other important USD/JPY news will be Thursday’s Bank of Japan (BoJ) interest rate decision. Analysts expect the bank to leave interest rates unchanged at 0.25%. Kazuo Ueda, the bank’s governor, also hinted at this during a meeting at Washington last week.
The BoJ will then deliver its economic outlook report and a press conference in which it will provide hints on what to expect later this year.
The most recent data showed that core inflation in Tokyo moved below the BoJ’s target of 2.0%. As such, there are signs that the unwinding of the Japanese yen carry trade will not continue.
The other key USD/JPY pair news is the weekend election in which the ruling party lost its majority in parliament. This is a notable event since it was the first time in fifteen years that the party lost the majority.
It is also notable since the party selected Shigeru Ishiba as the new prime minister recently, meaning that he will need to form a coalition government.
USD/JPY technical analysis
The daily chart shows that the USD/JPY exchange rate has done well in the past few months. It has risen from the September low of 140 to near 154, its highest level since July 30th.
The pair has moved above the 50-day and 100-day Exponential Moving Averages (EMA), which are about to have a bullish crossover.
Also, oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. Therefore, the path of the least resistance point will be 154.52, its lowest point on June 4. A move above that level will point to more gains.
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