It continues to be a quiet week for USD/JPY. In Thursday’s North American session, the pair is trading at 111.57, down 0.17% on the day. On the release front, U.S. employment claims dipped to 223 thousand, below the estimate of 225 thousand. Investors will be keeping an eye on Japanese numbers. Household spending is expected to decline by 0.1% and GDP is forecast to expand by 0.4%. On Friday, the focus will be on employment numbers, as the U.S. releases wage growth and nonfarm payrolls.
After four rate hikes from the Federal Reserve in 2018, the central bank has starkly changed directions, with no rate hikes so far in 2019. The Federal Reserve has been in dovish mode since December, and this stance was reinforced by Jerome Powell in testimony before Congress. On Tuesday, Boston Fed President Eric Rosengren, who is a considered a hawk on monetary policy, said that there was some downside risk to the U.S. economy and called on policymakers to be “patient” for several more meetings in order to evaluate the risks to the economy. Without being explicit, Rosengren appears to support the Fed remaining on the sideline for the upcoming policy meetings until the Fed can better gauge the health of the U.S. economy.
Is a breakthrough imminent in the bitter U.S-China trade row? The conflict has weighed on the global economy and caused significant volatility in the equity markets, with nervous investors snapping the safe-haven yen. Now that trade tensions have eased between the two super-economies, investor risk appetite has improved. If progress continues and the sides ink an agreement, the yen will be less attractive as investors feel more comfortable with riskier assets.
