USD/JPY Outlook Mired by Failure to Defend Monthly Opening Range

Despite being the most widely traded currency in the world, the USD/JPY hasn’t been in a great mood lately. The currency is stuck on a flat plane courtesy of a weakening US Treasury bond yield, whose market-based benchmark rate is currently at a six-year low of 1.375%. This isn’t helped by an upcoming Fed rate hike that most markets fully expected. Nevertheless, the currency has managed to claw back some ground. Traders should consider the latest JOLTS Job Openings data for insight into a potential short-term trading opportunity.

While the latest US Q3 GDP report will not be released until late next week, traders will be treated to a myriad of datapoints in the form of the ADP report, Prelim US Q3 GDP and US Treasury bond yields. The Fed is expected to raise the benchmark rate by a modest 50 basis points in December, but a larger hike is widely expected. Considering that the Fed is expected to wind down its balance sheet by June, the central bank could be expected to take its time in tightening monetary policy. The latest FOMC-approved report showed an increase in the number of unemployed workers by a scant 2,000, a sign that the labor market is hardly overheated.

However, the latest US CPI numbers will likely not impress. The headline tamer is expected to show a small improvement over March’s reading, which was a whopping 8.5%. Despite the fact that CPI is a good measure of inflation, the news isn’t likely to have a major impact on the yen’s prospects.

Although the currency has managed to claw back some ground, traders should consider the latest JOLTS Job Openings and Fed rate hike data to be the focus of their attentions. The latest US Q3 GDP report should prove to be a winner in the short-term trading space, while the Fed’s latest flurry of policy decisions will likely be the deciding factor in the long-term direction of the currency