What’s next? – USDJPY 03.05.18

The dollar was trading 0.22 percent lower vs the Japanese yen at 109.59 as of 06:50 GMT on Thursday, as market participants digested Fed’s acknowledgement on inflation.

The pair settled higher in the previous session as traders continued to bet on the dollar ahead of a widely anticipated Federal Reserve interest rate decision.

The dollar extended gains in the previous session as market players anticipated a hawkish position of the US regulator regarding interest rate adjustments for the near future.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was unchanged at 92.34 by the time of this writing.

The US central bank decided to keep its benchmark rate steady in a range between 1.50 percent and 1.75 percent, although it reassured its commitment with monetary normalization.

Market participants estimate at least two more rate hikes this year. However, it is worth mentioning that chances for a fourth rate hike in December are close to 40 percent already.

Also contributing to a stronger greenback was the personal consumption expenditures (PCE) price index excluding food and energy, released earlier this week. The index increased 1.9 percent in the 12 months through March, very close to Fed’s 2 percent target.

On the data front, ADP nonfarm employment change for April came in at 204,000 jobs, surpassing a forecasted 200,000 reading.

Ahead in the US session, initial jobless claims, trade balance for March, nonfarm productivity and unit labor costs for the first quarter are all scheduled for release at 12:30 GMT.

The services and composite PMI will be published at 13:45 GMT. A few minutes later, durable goods orders, factory orders and the ISM non-manufacturing PMI await in the cue.

FortFS