USD/JPY – Japanese yen unchanged as Japanese Core CPI within expectations

USD/JPY is unchanged in the Wednesday session. In North American trade, the pair is trading at 112.98, up 0.01% on the day. In economic news, the BoJ Core CPI posted a gain of 0.5% for a second straight month, just shy of the estimate of 0.6%. This indicator is closely watched, as it is the BoJ’s preferred gauge for measuring consumer inflation. In the U.S, the focus is on the Federal Reserve, which is virtually certain to raise the benchmark rate to a range between 2.00% and 2.25%. On Thursday, the U.S will publish Final GDP and durable goods orders. Japan will release Tokyo Core CPI and retail sales.

The markets are keeping a close eye on the Federal Reserve, which is widely expected to raise rates by 25 basis points at the conclusion of its policy meeting on Wednesday. Investors will be poring over the rate statement, in which policymakers will weigh in on the strength of the economy and perhaps on future rate policy. What will be the tone of the statement? The U.S economy is in excellent shape, with GDP for Q2 expected at 4.2%, unemployment hovering below 4 percent and inflation moving closer to the Fed target of 2 percent. However, the escalating global trade war has raised concerns that it could cool down global economic growth and hurt the U.S economy as well. Still, another rate hike in December is pegged at 78% according to the CME, and some experts are predicting up to four rate hikes in 2019.

On Monday, the BoJ released the minutes of last week’s policy meeting. The BoJ is showing no signs of altering its ultra-accommodative policy. but the minutes indicated that some policymakers are concerned about the impact of the policy on the banking system. With inflation still below the Bank’s target of around 2 percent, the BoJ is unlikely to take anything more than tweak current policy. At the policy meeting, the Bank held its short-term interest rate target at -0.1 percent and a pledge to guide 10-year government bond yields around zero percent. The BoJ also maintained a pledge to keep interest rates extremely low for an extended period.

Decision Day : The FOMC looms

US Dollar steadies ahead of FOMC decision

Look to Fed’s Powell for help

USD/JPY Fundamentals

Wednesday (September 26)

• 1:00 BoJ Core CPI. Estimate 0.6%. Actual 0.5%
• 10:00 US New Home Sales. Estimate 630K. Actual 629K
• 10:30 US Crude Oil Inventories
• 14:00 US FOMC Economic Projections
• 14:00 US FOMC Statement
• 14:00 US Federal Funds Rate. Estimate <2.25%
• 14:30 FOMC Press Conference

Thursday (September 27)

• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Final GDP. Estimate 4.2%
• 8:30 US Durable Goods Orders. Estimate 1.9%
• 16:30 US Fed Chair Powell Speaks

*All release times are DST

*Key events are in bold

USD/JPY for Wednesday, September 26, 2018

USD/JPY September 26 at 10:35 DST

Open: 112.97 High: 113.05 Low: 112.75 Close: 112.98

USD/JPY Technical

USD/JPY showed little movement in the Asian session. The pair posted small gains in European trade but then recovered. USD/JPY is steady in North American trade

• 112.30 is providing support
• 113.75 is the next resistance line

Further levels in both directions:

• Below: 112.30, 111.22, 110.21 and 109.21
• Above: 113.75, 114.73 and 115.51
• Current range: 112.30 to 113.75

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