USD/JPY is having a look at 146.00 after touching a 2023 high of 147.36 earlier today. It’s a rapid turnaround as the market re-evaluates the path of Federal Reserve rates and the strength of the US economy.
USDJPY 10 mins
The drop of more than 120 pips threatens a spinning top formation on daily and an outside reversal.
US job openings fell sharply in June and that’s an indicator the Fed watches closely. At the same time, US consumer confidence also posted a surprise fall, albeit from elevated levels.
The market is sensing clouds on the US horizon and that will add to the reasons for Powell to pause rate hikes in September. I fully expect him to continue to signal a hiking bias but by the time the November meeting comes around, it should be clear that growth is slumping.
Another good look at the recent trend is the Citi US economic surprise index and it’s showing that data is increasingly missing the expectations of economists.
That sets up some major releasesthis week, including ADP employment tomorrow, the PCE report Thursday and non-farm payrolls on Friday.