Important events today:

13:45 UTC: USD – Composite PMI Index.

The Dollar-Yen pair is holding near the 159.00 mark during the Asian session on Friday after six trading sessions. It is expected that the asset will continue to rise towards the multi-year high around 160.00, as investors anticipate that the Bank of Japan (BoJ) may further delay plans to reduce bond purchase volumes after the July meeting.

At the latest monetary policy meeting, Bank of Japan Governor Kadsuo Ueda stated that policymakers had decided to postpone plans to reduce bond purchases and further raise interest rates until the July meeting. Policymakers also expressed concerns about inflation expectations due to the significant weakening of the Japanese yen, which has made Japanese exports competitive in the global market and increased import costs. The consequences of a weak yen could lead to high inflation in the economy.

However, recent Consumer Price Index (CPI) data for May suggests otherwise. The core CPI, excluding food and energy prices, fell to 2.1% from the previous reading of 2.4%. The report showed that the national CPI, excluding fresh food, grew slower at 2.5% compared to an expected 2.6%, but was higher than the previous reading of 2.2%.

Meanwhile, the USD exchange rate has declined to 105.50 but remains stable overall as investors expect the Federal Reserve (Fed) to lag behind other central banks in the normalization process. Fed policymakers have already indicated that there will be only one rate cut this year, expected to be announced in the last quarter. Contrary to the Fed’s recent rate forecasts, financial markets expect two rate cuts, with the policy expansion process starting from the September meeting.

Recommendations: Trading predominantly with Buy orders from the current price level.