US inflation data released last Friday has increased probability of the interest rate increase in the United States in the coming months. According to data, consumer price index (CPI) has grown by 0.2% in August against the forecast of 0.1%. On annual basis the index has grown by 1.1% against the forecast of +1.0%. According to CME Group's, probability of the rate hike in December has increased to 53% from 48% a day ago. The USD index ICE dollar has grown by 0.9% to 96.10, which is the maximal closing level in more than a month. August compared to July, the (CPI) in the US.

Last Friday the USD rose in the market including the pair USD/JPY, but the rise in this pair was considerably slower than in the other currency pair. The USD has significantly grown against the pound. The decline in the GBP/USD was the strongest since 5 July.

A lot of news and statistics is scheduled for the release this week. The most important day for the pair USD/JPY will be Wednesday when the Bank of Japan (06:00 GMT+3) and then US Fed (21:00) will make their interest rates decisions.

Probability of rate hike in the USA is 15%, while probability of the changes to the program of quantitative and qualitative easing (QQE) by the Bank of Japan is about 50/50. Earlier Mr Kuroda has repeatedly stated that the Bank of Japan was ready to introduce the most drastic measures if the need be. If these measures will be introduces at the coming meeting, the Yen will decline significantly in the foreign exchange market and against the USD.

According the monthly economic report of the Japanese government published last Friday, country’s economy continues to recover at a moderate pace. The government also upgraded assessment of the personal consumption and business sentiment. Expectations of the additional easing by the Bank of Japan are low.

It is likely that the pair will decline with the nearest targets of 100.60 and 100.00 due to expectations that the Bank of Japan and the US Fed will leave monetary policy unchanged.

USD/JPY: The pair is likely to decline. Fundamental analysis of 19/09/2016.

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