USD/JPY Spikes after Ueda comments, PCE in focus

The US dollar edges higher ahead of PCE data

By Nadia Elbilassy | @Nadia Elbilassy | 5 July 2023

Midday Market update
  • Next week FOMC will dominate sentiment

  • European stocks open the last session of the week lower

  • The Bank of Japan keeps interest rates unchanged

Bank of Japan sticks to easy policy

In the first meeting of the monetary policy committee led by the new governor of the Bank of Japan Kazou Ueda. The bank-maintained interest rates at -0.1%, while keeping the yield on Japanese government bonds for 10 years at 0.00%.

Ueda stated that they are currently evaluating monetary policy conditions and likely to alter the monetary policy in the next meeting. In his first official speech after his inauguration, he confirmed the Bank's commitment to flexible monetary policy and identified the challenge of continuing to ease monetary policy as a priority. Pledging to maintain monetary easing and highlighted the role that current monetary incentives have played in pulling Japan out of the contraction.

As for trading, the US dollar index witnessed a significant rise against the yen, with the pair surging to 136.05.

PCE Data in focus, USD remains stable

The positive US unemployment claims data, which revealed the strength of the US labor market, has boosted market expectations of the US Federal Reserve continuing to raise interest rates during its upcoming meeting next week.

As a result, the US dollar was last seen hovering near 101.74 points. The stability of the US dollar index suggests that market participants may be cautiously optimistic about the US economy's near-term outlook, though it remains to be seen how economic data releases and the Federal Reserve's policy decisions will shape future currency movements.

On the other hand, risk appetite towards trading in the precious metal declined significantly amid the strength of the USD trading near $1,984.