The USD/JPY currency pair experienced a slight rebound, closing at 149.322 after a modest 0.21% dip from the previous day's trading. This article sheds light on key developments impacting the USD/JPY exchange rate, including the forthcoming release of Japan's Tankan surveys for the third quarter and the potential influence of U.S. manufacturing data, coupled with speculations regarding the Federal Reserve's actions.
The focal point for Forex traders today revolves around the Tankan survey-based figures for Q3. Economists anticipate the Tankan Large Manufacturers Index to witness a modest uptick, rising from 5 to 6 in the third quarter. Moreover, the Tankan Big Manufacturing Outlook Index and Large Manufacturers Index are essential metrics to monitor, with expectations of a dip in the outlook index from 9 to 5, while the Non-Manufacturers Index is projected to rise from 23 to 24. These surveys conducted by the Bank of Japan are critical in shaping future monetary policy decisions and can significantly affect Japanese Yen trends.
Later today, attention shifts to the U.S. ISM Manufacturing PMI, with forecasts suggesting an increase from 47.6 to 47.8 in September. While manufacturing sector PMIs typically have a limited impact on the Forex market, recent market sensitivity to weak economic data has put the manufacturing sector back on the radar. Any signs of further weakness could raise concerns about a potential U.S. economic recession. Additionally, Federal Reserve Chair Powell's comments following the ISM Manufacturing PMI release may offer valuable insights, especially in the context of softer inflation numbers and a tight labor market.
Recent developments have seen fluctuations in market expectations regarding Federal Reserve rate hikes. While the likelihood of a November hike diminished to 18.3%, uncertainty looms over December, with a probability of 31.4% according to the CME FedWatch Tool. Sentiment toward the Fed's monetary policy is poised for significant shifts in the coming week, with the ISM Non-Manufacturing PMI numbers and the U.S. Jobs Report awaiting release. These events are pivotal in shaping Forex market sentiment and trading strategies.
Analyzing the USD/JPY price action, the currency pair remains above the 50-day and 200-day EMAs, signaling a bullish trend. Potential resistance lies at the 150.293 level, contingent on the pair staying above the 148.405 support. Key factors to watch include the Tankan survey outcomes and Powell's remarks, as a hawkish tone from the Fed Chair could drive positive momentum for the USD/JPY. Forex traders should keep a close eye on these developments, as they hold the potential to impact their trading decisions in the dynamic Forex market.