The USD/JPY Risk Profile Has Faded Away In The Face Of The Lack Of Volatility In The Market

Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)
  • USD/JPY oscillates near the 147.00 shore as the risk-off impulse is extremely quiet.
  • Fed minutes and the money market have given a green signal for a third consecutive 75 bps rate hike.
  • Apart from the US CPI, investors await fresh impetus on BOJ’s intervention plans.

The USD/JPY pair is displaying a lackluster performance in the Asian session as investors are awaiting the release of the US Consumer Price Index (CPI) data. The asset is oscillating in a narrow range of 146.67-146.90 and is expected to continue the rangebound performance. The risk profile is turning quiet amid the absence of volatility in the market.

The US dollar index (DXY) has recovered its morning losses and is attempting to extend its recovery above the day’s high at 113.35. The mighty DXY is expected to remain in the grip of bulls as odds for a fourth consecutive 75 basis points (bps) by the Federal Reserve (Fed) are escalating with sheer momentum. Money market bets indicate that the probability of a 75 bps rate hike announcement is 84%.

Wednesday’s keen-jerk reactions by the DXY were comfortably absorbed by the market participants after the release of the Fed policy minutes. Fed policymakers found favoring the continuation of the current pace of hiking interest rates to achieve the agenda of price stability. Also, reaching the targeted terminal rate and sticking to it for an uncertain period is critical to contain the mounting price pressures.

On the Tokyo front, odds for intervention in the currency market by the Bank of Japan (BOJ) are skyrocketing. The verdict has strengthened as Japanese Finance Minister Shunichi Suzuki said on Thursday that the government will take decisive action in the FX market if speculative moves are observed in the yen.

He further added that volatility is in the consideration of Japanese officials rather than a specific dollar/yen level.

Well, volatility in the asset cannot be ruled out as escalating anxiety ahead of the US inflation data will explode and wild moves will be witnessed by the market participants.

Caixin Services PMI Data Has Helped The Chinese Yuan (CNH)

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