Currently, USD/JPY is trading at 112.21, down -0.06% on the day, having posted a daily high at 112.32 and low at 112.18.
The focus is back on the Fed, and the Fed fund futures yields continued to price the chance of a December rate hike at 87%. The PPI data for the US, as a potential prelude to Friday’s key CPI that will draw a lot of attention this time around due to the concerns that some of the FOMC members showed within Wednesday’s minutes in regards to the possibility that this lowe spell of inflation is not just transitory, rose 0.4% in September as expected.
The ex-food and energy measure also rose 0.4% vs 0.2% expected and leaves Friday’s CPI in good light. However, the dollar can stay soft on the back of the possibility that 2017’s tax reform is not on schedule due to the intra-republican party disunity, the same disunity we saw in the healthcare bill. Bears have been in increasing control with the 113 handle disappearing over the horizon on continued failed upside attempts. BoJ’s Kuroda was crossing the wires repeating that the BoJ will maintain current easy monetary policy as inflation remains far from 2% target. Politically, another victory for Abe remains likely, as reported by Nomura: Political risk disappearing: another victory for Abe likely
Valeria Bednarik, chief analyst at FXStreet explained that with the pair barely holding above 112.00, the 23.6% retracement of its September low/October high rally.
“The 4 hours chart shows that selling interest has been limiting advances around the 100 SMA, currently around the mentioned 112.50, while the Momentum indicator continues lacking directional strength within neutral territory, although the RSI indicator gains downward strength within negative territory, now around 40, supporting a bearish extension for the upcoming session, moreover on a break below the mentioned support,” Valeria added.