Economists are anticipating an upward trend in the ISM Manufacturing PMI from 46.8 in July to 47.8 in August. Despite the manufacturing sector contributing less than 30% to the US economy, positive figures could potentially support the notion of a soft landing for the US economy.
Investors will be closely monitoring the subcomponents of the ISM Manufacturing PMI report, with a particular focus on job creation trends. The current scrutiny of the US labor market adds significance to this data point. A positive outcome could potentially lead to decreased bets on a 50-basis point rate cut by the Federal Reserve in September. However, weaker figures could fuel speculation about a more aggressive rate cut, resulting in a decline of the USD/JPY pair.
Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, has indicated the importance of the inflation numbers released on Friday. The US core PCE deflator figures were slightly below market expectations, indicating a softer inflation rate. This situation suggests that the Federal Reserve might proceed with a 25-basis point rate cut in September, barring any significant deterioration in the job market.
The movements of the USD/JPY pair will also be influenced by data from Japan, including the services sector PMI, wage growth, and household spending figures. Positive economic indicators from Japan may lead to increased bets on a rate hike by the Bank of Japan in Q4 2024, thereby strengthening the demand for the Yen. However, developments in the US services sector and labor market conditions will play a significant role in determining the direction of the USD/JPY pair.
It is essential for investors to remain vigilant and stay informed about real-time data, central bank announcements, and expert opinions in order to adjust their trading strategies accordingly. Monitoring the USD/JPY volatility and staying updated with the latest news and analysis will be crucial in navigating the market fluctuations. The technical analysis of the USD/JPY pair suggests that a breakout above certain resistance levels could signal further bullish momentum, while a drop below key support levels may indicate a bearish trend in the near term.
The upcoming release of the ISM Manufacturing PMI data will have significant implications for the USD/JPY pair. Investors should carefully assess the economic indicators from both the US and Japan, as well as expert commentary, in order to make informed trading decisions.