In what is a relatively quiet market calendar week, the major macroeconomic event this week is probably the FOMC’s meeting minutes rather than any actual data releases scheduled. This is largely due to the succession of weaker data updates that we have had out of the United States in the last couple of weeks which have seen Fed rate hike expectations fall off considerably.
Non-Farm Payrolls were the first big surprise when they came in nearly 100k lower than expected with a negative number when expectations had been for a positive update again and this was then backed up with the second part of the Fed’s dual mandate last week when inflation numbers pulled back. The CPI data came in largely on expectations, albeit lower than last month, however the PPI data printed well below expectations.
Any signs from the meeting notes that the Fed will look to hold rates in September if data starts to fall could reinforce the moves we have seen in the market over the last couple of weeks and provide the catalyst for a move lower in the dollar.
USDJPY could possibly see the biggest moves off the back of a strong skew in the FOMC’s thinking. It is now sitting in the middle of a very big range that has been brought about by several rounds of strong intervention by both the Bank of Japan and the Fed, and this opens up the potential for big figure moves on any surprises. A less hawkish update could see some strong dollar selling, while indications that the Fed is still concerned about the inflation side of its mandate, especially given the ongoing inflationary concerns with regard to the Middle East conflict could see rate hike expectations increase again and the dollar with it.
Resistance 2: 163.98 – 2026 High and Trendline Resistance
Resistance 1: 159.77 – August High
Support 1: 158.29 – 200 Day Moving Average
Support 2: 155.75 – Trendline Support
