The Bank of Japan may raise interest rates soon.

The Japanese yen remains steady at around 144.5 yen per dollar, as the U.S. Federal Reserve's trend of interest rate cuts continues to impact the U.S. dollar. Fed officials have warned of risks in the labor market, which could slow down further, and expressed confidence that inflation will return to target levels.

Kazuo Ueda, Governor of the Bank of Japan, stated last week that the central bank could adjust its monetary policy further if economic data aligns with its expectations. Similarly, Ryuzo Himino, Deputy Governor of the Bank of Japan, shared a similar view. As for the weaker yen, the Bank of Japan may not intervene heavily in the currency but will focus on tightening monetary policy.

Japan's Leading Economic Index, which measures economic trends over the coming months based on employment data and consumer confidence, was revised up to 109 in June. The unemployment rate remained steady at 2.5%, the lowest level since January, and there was a slight recovery in manufacturing activity, while service sector activity declined for the first time since 2022, creating only slight pressure.

The Manufacturing PMI increased to 49.5 in August from 49.1 in the previous month. Factory activity continued to contract for the second consecutive month, but the contraction was slightly reduced as new orders fell slightly due to a faster decline in foreign sales and pressure from price competition compared to other countries. Meanwhile, output grew slightly as increased labor availability helped boost production capacity. However, companies faced higher costs due to the fastest rise in input prices since 2023.

The yield on Japan's 10-year government bonds rose to 0.9% after Ryuzo Himino, Deputy Governor of the Bank of Japan, indicated that the central bank may raise interest rates further if economic activity trends as expected. Recent data shows Japan's core inflation has risen for the third consecutive month to 2.7%, while general inflation remains at 2.8%. As a result, investors are closely watching Japan's economic data this week due to the release of important economic information.

Techical analysis data (5H)

Resistance: 145.76, 146.16, 146.82

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 144.04 - 144.7 but cannot break the support at 144.7, you may set a TP at approximately 146.16 and SL at around 143.64 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 145.76 - 146.16, you may set a TP at approximately 146.82 and SL at around 144.04 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 145.76 - 146.16 but cannot break the resistance at 145.76, you may set a TP at approximately 144.04 and SL at around 146.82 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 144.04 - 144.7, you may set a TP at approximately 143.64 and SL at around 146.16 or according to your acceptable risk.

Pivot point August 29, 2024 11:02 PM. GMT+7