Japanese Yen slips as Oil lifts yields ahead of the Fed
USD/JPY trades near 155.20 on Tuesday, rising for a second straight day and pulling away from the roughly seven-month low it set last week. A firmer US Dollar (USD) is doing the work, helped by a sharp jump in Oil that has pushed US Treasury yields higher.
The Japanese Yen faltered on Tuesday as oil prices propelled yields ahead of the Federal Reserve's decision. The US Dollar strengthened, aided by a sharp increase in oil and higher energy costs fueling inflation expectations, which lifted yields and the safe-haven Dollar. The Federal Open Market Committee (FOMC) meets on Wednesday, with markets anticipating a 25 basis points (bps) rise to 3.75%-4.00%, the first increase after five consecutive holds.
US Retail Sales for August will be released on the same day. Strong labor figures, including a pickup in the ADP employment gauge, bolstered the hawkish case. The Bank of Japan (BoJ) is expected to announce a rate hike on Friday, with rates projected to reach 1.25%. Japanese wage and growth data have bolstered these predictions, and speculators have reduced their positions against the Yen since the Bank of Japan's summer intervention.
The USD/JPY pair is trading at 155.18, holding a bullish short-term bias above the 20-period Simple Moving Average (SMA) at 154.37. Immediate resistance is at 155.22, while the four-hour downtrend line implied by the longer average could challenge further gains.
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