Daily Fundamental Analysis by ForexMart

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Fundamental Analysis for USD/JPY: October 5, 2016

The USD increased in relation to the Japanese yen during the last trading session, with the USD/JPY pair closing the session at 102.90 points after increasing by +1.24% or 1.265 points. The pair’s current value is its highest trading level since September 15, putting pressure on the currency pair to exceed its highest level last September 14 at 103.351 points.


The increase in the USD was mostly due to a significant increase in US Treasury yields. The positive ISM Manufacturing PMI data released on Monday triggered an upsurge in Treasury yields, increasing the possibility of an interest rate hike this coming December. Comments from Fed officials also strengthened the US dollar, after Federal Reserve President Jeffrey Lacker stated that there is a high probability that interest rates would be increased and that inflation rates would be put under control by increasing borrowing costs.


The CME Group’s FedWatch indicator also showed that traders are seeing a 63% chance that the Federal Reserve would increase its interest rates during its meeting on December 13-14, an 11% increase from the previous reading after the last Fed meeting on September. This was also cemented by comments from the Federal Reserve Bank of Cleveland’s President Loretta Mester, who called for higher interest rates from the Fed. Fed officials, however, are keeping their respective profiles low as of the moment.