Japanese Yen Talking Points
USD/JPY[1] pulls back from the monthly-high (112.14) even as data prints coming out of the U.S. instill an improved outlook for the economy, and exchange rate may continue to consolidate ahead of the Non-Farm Payrolls (NFP) report as it snaps the series of higher highs & lows from the previous week.
USD/JPY Pulls Back Ahead of NFP Report on Fed’s Wait-and-See Guidance
The USD/JPY advance following the U.S. Gross Domestic Product (GDP) report[2] appears to be stalling as Federal Reserve officials continue to tame bets for higher interest rates, and it seems as though the central bank will defend the wait-and-see approach at the next rate decision on March 20 as the Trump administration struggles to reach a trade deal with China.
Recent remarks from New York Fed President John Williams, a permanent voting-member on the Federal Open Market Committee (FOMC), suggest the central bank will continue to alter the forward-guidance amid the ‘downturn in global growth, heightened geopolitical uncertainty, and the effects of tighter financial conditions,’ and Chairman Jerome Powell[3] & Co. may start to taper the $50B/month in quantitative tightening (QT) over the coming months as ‘the Committee can now evaluate the appropriate timing and approach for the end of balance sheet runoff.’
However, the FOMC[4] may have a difficult time in defending the wait-and-see approach for monetary policy as U.S. Initial Jobless Claims unexpectedly narrows to 223K from a revised 226K in the week ending February 23, with Continuing Claims highlighting a similar dynamic as the figure slips to 1755K from 1805K in the week ending February 16. The slowdown in claims for unemployment benefits bodes well for the
