The key event for the dollar this week will be the speech of the Fed Chairman Janet Yellen at the annual economic symposium in Jackson Hole (United States). Her speech is scheduled for Friday and Saturday, and the time of her speech will be announced separately.
Market participants are prepared to hear from Yellen general words about the current situation, the favorable situation on the labor market and stable inflation in the US. It is also unlikely that Yellen will give a signal of an interest rate hike in September, and she will probably say again that the rise in US interest rates this year is still possible. This option is taken into account in the main scenario. Futures on interest rates estimate the probability of a rate hike by 0.25% in December at about 50%.
The current weakening of the dollar on the foreign exchange market demonstrates perfectly the investor sentiment towards the US monetary authorities' actions. Weak US economic data released earlier in August (GDP and labor productivity for the 2nd quarter) will not allow the Fed to raise the rate in the current situation, despite the positive data from the US labor market received in July, and unequivocal statements of other Fed officials last week about the possibility of an early increase in US interest rates.
At the moment USD/JPY pair is close to the support level 100.00. And, in the opinion of many market participants, the breakthrough of this level and a decline to the level 99.00 (the lowest since November 2013 and following the referendum on membership of the UK in the EU) is a matter of time.
Unless, of course, the Fed takes an unequivocal tough stance on its monetary policy and begins to raise interest rates. But many investors already predict such an increase in January 2017, and the more pessimistic of them - in the middle of 2017.
The next meeting of the Bank of Japan, as well as of the Fed, on monetary policy is scheduled for September 20-21.