Dollar/yen made a cautious move to the upside as trade war fears were subsided quite quickly. Can this last? A busy start to the week features the FOMC Minutes, the NFP, some surveys from Japan, and the recurring theme of trade wars.

USD/JPY fundamental movers – Some relief in the trade wars

The Trump Administration made threats against the EU early in the week but markets later cheered the move to allow an independent institution to monitor Chinese investments, a move that seemed like a softening of his stance. This helped remove flows to the safe-haven yen.

US data was mixed. The final GDP disappointed with 2% annualized growth while the Core PCE surprised with a move to 2%, the Fed’s target. Durable goods orders missed on the core but came on top of upward revisions.

Japan’s Tokyo inflation report surprised to the upside on all measures, including the all-important figure that excludes fresh food. This did not help the Japanese yen.

FOMC minutes, full FOMC buildup and some Japanese data

The first week of the month and the quarter opens with a full buildup to the Non-Farm Payrolls. The ISM Manufacturing PMI on Monday is followed by the ADP NFP and the ISM Manufacturing on Thursday, all leading to the big release on Friday. The NFP is expected to result in a “more of the same” publication: around 200K jobs gained and a monthly wage growth of 0.3% in June, identical to that in May.

In addition, Thursday sees the publication of the all-important FOMC Meeting Minutes for the hawkish hike seen in June. The Fed signaled two additional interest rate raises in 2018 and Fed Chair Powell sounded very optimistic about the economy. It will be interesting to see if the lengthy document includes insights about trade relations. If the Fed expresses concerns, markets can suffer.

See all the main events in the Forex Weekly Outlook

Updates:

USD/JPY Technical Analysis

112.20 supported the pair back in December. It is followed by 111.40 which capped the pair in mid-May.