At the conference in Jackson Hole the Fed Chairman Janet Yellen expressed confidence that "the case for an increase in the federal funds rate has strengthened in recent months." At the same time, Yellen also signaled that rates are likely to remain close to historic lows in the next year, and possibly longer. "Looking ahead, the FOMC expects moderate growth in real gross domestic product (GDP), additional strengthening in the labor market, and inflation rising to 2 percent over the next few years. Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time", - said Yellen.
For many participants of the financial market, Yellen’s statements contained contradictory intonations as to the US monetary policy prospects.
More confidence was instilled in the investors by the comments of the Fed Vice Chairman Stanley Fischer, who believes that the US central bank may raise interest rates next month. However, Fischer added that "but these are not things we know until we see the data." Thus, the intrigue of a possible interest rate hike in the US, and therefore of the position of the dollar on the currency market, remains.
At the last symposium in Jackson Hole the BOJ Governor Haruhiko Kuroda said an already familiar phrase that the central bank will "not hesitate" to take additional mitigation measures to achieve the target inflation level in Japan.
USD/JPY pair jumped 130 points on the comments by the Fed on Friday, and now the pair is continuing to rise. During Asian trading session USD/JPY pair strengthened to 102.30, the highest level since August 12.
USD/JPY pair may still rise before the Fed and the Bank of Japan meeting on September 20-21 amid the differences in the monetary policies in the US and Japan. However, in the future, according to many economists, the dollar will continue to weaken against the yen.
Today we expect data from the US. At 15:30 (GMT +3) inflation indices for the US in July (personal consumption expenditures, personal income / spending) will be published. If the figures are higher, it will support the dollar, and vice versa.
Tomorrow at 02:30 we expect macro data in Japan in July (household spending, unemployment, retail sales in Japan - the most important indicators of inflation level and Japan's labor market). High volatility is expected not only in the yen, but across the entire Asian stock market.