The Japanese yen has posted slight losses in the Wednesday session. Currently, USD/JPY is trading at 114.50. On the release front, there are no Japanese events on the schedule. In the US, it’s a busy day. We’ll get a look at release retail sales and CPI reports, and Janet Yellen will continue her testimony about the semiannual Monetary Policy Report before Congress. On Thursday, the US releases three key events – Building Permits, Philly Fed Manufacturing Index and unemployment claims.
The yen continued to lose ground following testimony from an upbeat Janet Yellen. The Fed chair testified before a Senate committee on Tuesday, and was surprisingly upfront about monetary policy, stating that she expected that the Fed would raise rates in the near future. Yellen stated that "waiting too long to remove accommodation would be unwise", referring to the re-hot labor market and expectations that inflation would reach the Fed’s target of 2 percent. Will the Fed opt to raise rates in March or in June? The markets will be looking for clues on the timing of a move, as Yellen continues her testimony on Thursday before the House Financial Services Committee.
President Shinzo Abe waxed positive about his summit last week with President Trump. Abe said the two leaders had agreed to have their finance leaders discuss currency issues that have caused tensions between the US and Japan. Trump recently charged that Japan was manipulating its currency to gain a trade advantage. The Japanese government has countered that its ultra-accommodative monetary policy was aimed at curbing deflation. Still, Abe and BoJ Governor Haruhiko Kuroda will have to keep a close eye on the yen – if the dollar pushes past 120 yen, Trump could express his displeasure with the exchange rate in order to protect US exporters.
