USD/JPY extended a rebound from recent three-week lows on Monday, as the US Dollar firmed on cooling investor bets that the Federal Reserve could indicate a slowdown in its aggressive monetary policy tightening cycle.
“Markets have been kind of expecting a Fed pivot on monetary policy. I think that is too premature, given how resilient the economy has been and particularly how high inflation has been,” Carol Kong, a currency strategist at Commonwealth Bank of Australia, was quoted as saying by Reuters.
Last week’s macro data showed US consumer spending had risen at a faster rate than expected in September, while inflation pressures continued to persist.
Consumer spending, which accounts for about 70% of US economic activity, increased 0.6% in September from August, according to data from the Commerce Department.
The personal consumption expenditures (PCE) price index rose 0.3% in September, while matching the pace in August. In annual terms, the PCE price index went up 6.2%, again matching the growth rate in August.
Markets expect the Federal Reserve to deliver another 75 basis point rate hike at its policy meeting this week.
Meanwhile, the Japanese Yen remained under pressure after the Bank of Japan kept monetary policy ultra-accommodative on Friday, defying global tightening trend.
As of 9:20 GMT on Monday USD/JPY was gaining 0.55% to trade at 148.25. Last week, the major Forex pair slipped as low as 145.10, which has been its weakest level since October 7th (144.63).
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 147.09
R1 – 148.21
R2 – 148.98
R3 – 150.10
R4 – 151.22
S1 – 146.32
S2 – 145.20
S3 – 144.43
S4 – 143.67