Whatâ€™s next? â€“ USDJPY 30.06.17
The dollar/yen was 0.07 percent lower at 112.09 as of 07:40 GMT, with the pair trading in a tight range ahead of key economic data in the United States later in the session.
The pair is currently depending almost entirely on monetary policy expectations. Investors await the PCE price index as of 12:30 GMT to reassess chances for a rate hike in the coming months.
According to Fed funds tracked by CME Group’s FedWatch tool, market participants are now pricing in more than a 47 percent chance of a rate adjustment in December. In such scenario, the short term rate will move to a range between 1.25 and 1.50 percent.
Yesterday, a fresh reading on the first quarter gross domestic product cheered markets and boosted the US dollar across the board. The Q1 GDP was updated upwards to 1.4 percent from a prior 1.2 percent, which serves as evidence that the economy is still growing healthy.
In Japan, household spending increased 0.7 percent in May, while the core CPI came in line with market analysts’ expectations at 0.4 percent. Industrial production weighed on the yen, as it fell a tick more than the expected 3.2 percent.
From a technical perspective, the 113.00 mark remains as a reachable target in the short term, with a possible extension to 114.00. The pair should build bullish momentum around the 112.00, which currently serves as a key support for the pair.
The pair is likely to move in the direction of Wall Street in the session, as the dollar and stocks remain closely correlated in terms of policy expectations.