After yesterday's pullback, the USD/JPY pair almost froze in flat, waiting for the next triggers. Today's macro data from the US should be the decisive factors that will set the route for the asset.
In the middle of the week, the dollar-yen pair could not stay near the level of 145, where it ended up on Tuesday thanks to unexpected statistics on US inflation.
Recall that in August, the consumer price index in the United States fell to 8.3% from the previous value of 8.5%, but exceeded market expectations. Economists had forecast annual inflation at 8.1%.
The fact that inflationary pressures eased less than expected further strengthened traders' confidence in the Federal Reserve's determination regarding interest rates.
Now the markets estimate a 63% probability of a September increase in the indicator by 75 bps. Expectations of a maximum rate hike – by 100 bps - also increased significantly.
These hawkish scenarios gave a strong boost to the dollar, which has already risen by more than 20% against the yen since the beginning of the year due to discrepancies in the monetary policy of the Fed and the Bank of Japan.
The USD/JPY pair again came close to the key mark of 145 on Tuesday, which, apparently, is a red line for the Japanese government.
In order to prevent the yen from collapsing below this level, the Japanese authorities again intensified verbal intervention on Wednesday. However, verbal warnings no longer scare the market as much as they used to.
Yesterday, the yen was able to recover only due to the fact that Japanese officials finally stirred. The exchange rate check initiated by the BOJ was the first harbinger of a possible actual intervention.
Against this background, the dollar retreated, but, it seems, not for long. This morning, the greenback is trying to grow within a narrow price range.
In Asian trading, a small support for the USD/JPY pair was provided by the comment of the representative of the ruling Liberal Democratic Party of Japan, Satsuki Katayama.
The official said that the Japanese government will not be able to contain the further depreciation of the yen on its own, since the country does not have effective means to combat the rapid depreciation of the exchange rate.
Also a positive factor for the asset was the report published on Thursday by the Ministry of Finance of Japan. According to the data, in August the country faced the largest trade deficit in the entire history of observations.
Last month, the indicator increased from 1.43 trillion yen to 2.82 trillion yen. The gap turned out to be much larger than economists had predicted (2.4 trillion yen).
The record growth of the trade deficit is caused by a sharp jump in imports of goods and services. In August, due to high energy prices and the fall of the yen, the indicator rose to 49.9% against the previous value of 47.2%.
The trade deficit has been observed in Japan for 13 months. This is the longest period in the last seven years.
The negative trade balance undermines the recovery of the country's economy. This is another argument in favor of the fact that the BOJ will not decide to change its monetary policy in the near future.
Most analysts believe that the monetary divergence between Japan and the United States will continue to grow, as a result of which the pressure on the yen will remain.
Experts expect increased volatility of the USD/JPY pair ahead of the meetings of the Fed and the BOJ, which will be held next week.
As for the current dynamics of the asset, today the dollar can again demonstrate growth against the yen, if, of course, it receives support from macroeconomic statistics.
A large portion of data is coming out on Thursday, but traders will be focused on retail sales for August.
Economists predict that retail sales increased by 0.2% last month, after the indicator remained unchanged in July.
The technical picture also shows the growth of the USD/JPY pair. Bulls are now getting hopeful for a firmer RSI and bullish MACD signals.
