Japanese yen punches past 110

The Japanese yen has posted slight losses for a second successive day. Currently, USD/JPY is trading at 110.16, up 0.17% on the day. It has been a relatively quiet week for the yen, which has been hovering close to the symbolic 110-level.

Powell under scrutiny

An abbreviated Jackson Hole Symposium takes place on Friday. Due to strict health guidelines, the meeting will be held virtually and has been scaled back from two days to just one day.

Fed Chair Jerome Powell will be the star attraction of the meeting, and Powell’s speech could shake up the tranquil currency markets. Just a few weeks ago, it was almost a given that a Fed taper was imminent, and that policy makers would provide a roadmap of an imminent tapering. However, with the explosion in infection rates from the Delta Covid variant, the markets have since lowered expectations and caution is the operative word ahead of the meeting.

What Powell says, or doesn’t say could have a significant impact on the movement of the US dollar – a hint of a timeline would be bullish for the US dollar, while a speech that steers clear of any insight into tapering could translate into disappointment and weigh on the US dollar. If Powell delivers a snoozer at Jackson Hole, what can we expect from the Fed? Most likely, we’ll get some taper details at the September policy meeting, with the Fed firing the taper trigger before the end of the year.

The dollar’s reaction to key US data today was muted. US GDP for the second quarter (QoQ) didn’t provide any surprises, as the strong gain of 6.6% was very close to the consensus of 6.7%. Jobless claims came in at 353 thousand, also within expectations.

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USD/JPY Technical

• USD/JPY is putting pressure on resistance at 110.30. Next, there is resistance at 110.82
•  On the downside, there is support at 109.19. Below, we find support at 108.60

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