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04/07/24
178
JPY Higher After Weak US Services Data
On Thursday, the Japanese yen rebounded and traded at about 161.01, 0.43% lower for the day. The yen has been sliding for the last four weeks and has dropped by 3.9% during that time. The yen fell to 161.95 on Wednesday, the lowest level since 1986.
On Wednesday, the US ISM Services PMI was disappointing and in June, it dropped to 48.8. This was much lower than the reading of 53.8 in May and the market estimate of 52.6 and was the lowest reading since May 2020.
The Federal Reserve will be happy with the weak services data as it watches for indications of a slowdown before it cuts interest rates.
The employment component of the Services PMI dropped from 47.1 to 46.1 and on Friday, the US market will be in focus as nonfarm payrolls for June are released. The markets are expecting a gain of 190K, versus May’s surprisingly strong gain of 272K.
If nonfarm payrolls drop to lower than 200K, it will strongly support a rate cut in Sept. which, according to the CME’s FedWatch tool, currently has a 66% chance.
Japan’s Household Spending has declined for 13 straight time before the streak ended with April’s gain of 0.5% m/m. A weak gain of 0.1% is expected for May.
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