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Old 14-08-2023, 10:45
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Default SD/JPY remains below 145.00 as BoJ provides limitless fixed-rate JGBs

The USD/JPY pair is currently trading below the significant level of 145.00, retreating from its year-to-date high during the Asian trading session. At present, the major pair hovers around 144.90, experiencing a marginal decline of 0.05% throughout the day.

On Friday, an important development came from the US Bureau of Labor Statistics, which revealed a substantial increase in the US Producer Price Index (PPI) for final demand on a year-on-year (YoY) basis. In July, the PPI rose by 0.8%, surpassing Juneís 0.1% and exceeding market expectations of 0.7%. Additionally, the University of Michiganís Consumer Confidence Index for July dipped slightly from 71.6 to 71.2, surpassing the anticipated figure of 71. Moreover, the UoMís 5-year Consumer Inflation Expectations for August declined to 2.9% compared to the previous estimate of 3.0%. This data resulted in a mild increase in buying activity for the USD/JPY pair, driven by heightened expectations of a potential 25 basis points tightening by the Federal Reserve (Fed) by the end of the year. Such expectations could strengthen the US Dollar, providing support for the USD/JPY pair.

In contrast, the Bank of Japan (BoJ) made a notable move by offering limitless Japanese Government Bonds (JGBs) with residual maturities of 5 to 10 years at a fixed rate. This announcement came during the early Asian session on Monday, causing the USD/JPY pair to briefly touch an intraday low near 144.65. Consequently, the pair recorded its first loss in six consecutive days after hitting a fresh yearly high earlier in the same day.

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