August 23, 2022 02:36 AM ET
By: AnalysisWatch
USD/JPY is struggling to break through the immediate 137.40 barrier after a decent rebound from 137.20. The asset's bullish stance is still favored as the U.S. Dollar Index (DXY) is expected to regain the 19-year high of 109.30 sooner or later.
Due to investor risk aversion ahead of the Jackson Hole economic symposium and after poor PMI performances in several countries, investors are moving their funds into the U.S. Dollar Index (DXY). The DXY is up sharply as the Federal Reserve (Fed) maintains its hawkish tone, despite little sign that price pressure is wearing off.
There is no doubt that the annual U.S. Consumer Price Index (CPI) slipped to 8.5% after reaching a figure above 9%. The Fed will continue its policy of raising interest rates as the current inflation rate is extremely far from the desired rate of 2%. As a result, Fed Chairman Jerome Powell will maintain a hawkish tone at the Jackson Hole Economic Symposium this week.
On the economic data front, investors are awaiting the U.S. Purchasing Managers' Index (PMI) numbers, which are expected to show mixed performance. The manufacturing PMI is expected to drop to 51.5 from the previous print of 52.2. However, the services PMI is expected to improve to 49.1 from the previous 47.3.
On the Tokyo front, pessimistic Japan PMI data weakened the yen against the greenback. The Jibun Bank manufacturing PMI recorded a weaker reading at 51 than expected and the previous releases of 51.8 and 52.1, respectively. Similarly, the services PMI remained down at 49.2 from the consensus of 50.7 and the previous figure of 50.3.
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