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Federal Reserve VS Bank of Japan
Investors' continued aversion to risk and the positive results of US economic data supported bulls in continuing to push the USD/JPY currency pair higher with gains that reached the resistance level of 149.85, the closest point to testing the psychological resistance of 150.00, which indicated the possibility of moving towards it if the discrepancy between policy continues. The US Federal Reserve and the Bank of Japan. In addition, the increasing geopolitical tensions in the Middle East region greatly supported the US dollar in achieving stronger gains.
According to latest economic news, US retail sales exceeded all expectations, and industrial production strengthened last month which is new evidence of the resilience of the US consumer, whose spending helps stabilize the manufacturing sector. According to an official announcement, sales, not adjusted for inflation, rose by 0.7% after upwardly revised progress in the previous two months, according to the Ministry of Commerce. So-called control group sales - which are used to calculate spending on goods in the GDP report - rose a better-than-expected 0.6%.
Overall, strong consumer demand, following September data that showed stubborn inflation and high job growth, threatens to prompt the Federal Reserve to raise US interest rates again. These reports prompted many economists, from Goldman Sachs Group to JP Morgan Chase & Co. and Morgan Stanley, to boost their estimates for tracking GDP for the third quarter.
Moreover, Following the data, the 10-year Treasury yield jumped to the highest level since 2007, while the S&P 500 index fell. Traders increased their bets on raising interest rates in the coming months and pushed their bets on the first cut to later in 2024.
Therefore, the progress in sales demonstrates a consumer who is still serving the economy and appears unafraid of rising prices. Spending is fuelled by a strong Labor market and defies economists' expectations of a slowdown against the backdrop of a decline in household savings linked to the pandemic. Elastic demand helps support the country's manufacturers. The Federal Reserve's index of US industrial production rose in September to the highest level in nearly five years, led by strength in the mining and manufacturing sectors. Factory production last month was supported by a recovery in the production of both consumer goods and construction supplies.
USD/JPY Outlook Today
There is no change in my technical view of the performance of the dollar currency against the Japanese yen (USD/JPY), as the general trend is still bullish, and the opportunity to move towards and above the psychological resistance of 150.00 is possible if the results of the US economic data and the statements of Federal Reserve Bank officials are supportive of more US interest rate hikes, which will expand the gap between it and the Bank of Japan. But at the same time, one must be wary of Japanese interference, and therefore it is better to sell from the highest levels without taking any risks. The Japanese intervention, if it occurs, will bring the USD/JPY currency pair strong selling operations, changing its direction to bearishness. The closest resistance levels to the current trend are 150.20 and 151.00, respectively. finally, over the same period, the support level of 147.30 will be important for causing a first break in the current upward trend.
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