USD/JPY Daily Forecast: Japanese GDP and BoJ Rate Hike Speculations Drive Market Sentiment

Japanese Economy and the BoJ Rate Path

On Monday, September 9, finalized GDP figures from Japan influenced demand for the USD/JPY pair and the outlook for the Bank of Japan’s (BoJ) rate path.

The economy grew by 0.7% in Q2 2024 after contracting by 0.5% in Q1 2024. The positive shift may bolster bets on a Q4 2024 BoJ rate hike. A more robust economy could boost consumer spending, possibly fueling demand-driven inflation. In response, the BoJ could raise interest rates to increase borrowing costs, dampening consumer spending and demand-driven inflationary pressures.

The Bank of Japan and the Rate Path

On Thursday, September 5, Bank of Japan Board Member Hajime Takata reportedly warned about hiking interest rates too soon. Despite concerns about the timing, Takata supported further rate hikes if the economy and price trends align with expectations.

US Economic Calendar

Later in the session on Monday, consumer inflation expectations may impact US dollar demand.

Economists expect consumer inflation expectations of 3% in August, unchanged from July. Lower-than-expected inflation expectation figures may raise bets on a 50-basis point September Fed rate cut. Lower inflation expectations typically lead to softer demand, dampening demand-driven inflationary pressures. Softer-than-expected inflation expectations could push the USD/JPY down toward 140.

Expert Views on the US Labor and the Fed Rate Path

AMP Head of Investment Strategy and Chief Economist Shane Oliver remarked on the US Jobs Report, stating,

“US Aug payrolls +142k,

Short-term Forecast: Bearish

USD/JPY trends will hinge on inflation figures from Japan and the US. Higher-than-expected inflation figures from Japan, coupled with softer-than-expected inflation numbers from the US, could narrow the interest rate differential between the US and Japan. A narrower interest rate differential may indicate a USD/JPY drop below 140.

Investors should remain alert with inflation data likely to influence the BoJ and the Fed’s rate paths. Monitor real-time data, central bank insights, and expert commentary to adjust your trading strategies accordingly. Stay updated with our latest news and analysis to manage USD/JPY volatility.

USD/JPY Price Action

Daily Chart

The USD/JPY sat well below the 50-day and 200-day EMAs, affirming bearish price signals.

A USD/JPY return to 142.500 would support a move toward the 143.495 resistance level. Furthermore, a break above the 143.495 resistance level could give the bulls a run at the 145.891 resistance level.

The GDP figures from Japan and the US economic calendar require consideration.

Conversely, a drop below 142 could give the bears a run at the 141.032 support level.

The 14-day RSI at 32.46 suggests a USD/JPY drop below 142 before entering oversold territory.