Throughout Thursday’s early Asian trading hours, the USD/JPY pair is still in a defensive position. The important pair is currently trading below its day’s low of 144.80, down 0.03%. As US Treasury yields dip below 4.20% and retreat from multi-year highs, the US Dollar (USD) is somewhat weaker.

third consecutive month that Japan’s industrial activity decreased in August, as announced on Wednesday. According to preliminary statistics from Jibun Bank, the manufacturing PMI for Japan rose to 49.7 in August from 49.6 in July. The outcome fell short of the predicted 49.5. Over the same time period, the Service PMI increased from 53.8 to 54.3. The US, UK, and Eurozone’s dismal first reading of the S&P PMI data, however, feeds recessionary fears and boosts demand for the Japanese Yen, a classic safe-haven asset.

The information that US business activity increased slowly in August caused the US Dollar (USD) to go downward. Despite this, the preliminary S&P Global Composite PMI fell to 50.4, from 52.0 before, and was lower than the 52.0 market estimate. Since November 2022, this drop has been at its biggest. S&P Global Manufacturing PMI decreased to 47 from 49 the month before, while Services PMI decreased to 51 from 52.4 the month before. In the meantime, US yearly New Home Sales came in at 714K, significantly beating predictions of 705,000.

Thomas Barkin, president of the Federal Reserve Bank (Fed) of Richmond, stated earlier this week that monetary policy would have to be tightened if inflation continued to be high. Market participants will use Thursday’s Jackson Hole Symposium as a guide for the outlook on interest rates. Hawkish remarks from the decision-makers at the central banks could restrict the Japanese Yen’s upward potential and strengthen the USD/JPY pair. Nevertheless, the major cause of the Yen’s depreciation is the divergence in monetary policies between the US and Japan.

The US durable goods orders and weekly jobless claims are both due on Thursday. For traders, the Jackson Hole Symposium will be a key event. On Friday, the focus will turn to the speech by Fed Chairman Jerome Powell. The events will be crucial in determining if the USD/JPY pair will move clearly.

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