Important events today:

19:00 UTC – USD: Consumer Sentiment Index from the University of Michigan

The Japanese Yen (JPY) extended its downtrend against its US counterpart for the fourth consecutive day on Friday and fell to a one-week low during the Asian session. Diminished chances of an imminent Bank of Japan (BoJ) policy change proved to be a key factor undermining the JPY. Indeed, BoJ Governor Kazuo Ueda gave a slightly gloomier assessment of the economy earlier in the week and dashed hopes of a rate hike next week.

On the contrary, a higher than expected US Producer Price Index (PPI) fueled speculation that the Federal Reserve (Fed) would reiterate its stance of raising interest rates for a longer period of time to bring down still-volatile inflation. This, in turn, was a tailwind for the US Dollar (USD) and provided additional support to the USD/JPY pair. This has largely overshadowed the risk-off momentum and has done little to reinforce the JPY’s safe haven status or limit the currency pair’s upside.

Meanwhile, the results of Japan’s spring wage negotiations showed that most companies agreed to union demands for wage increases, which should allow the Bank of Japan to exit negative interest rates in the coming months. Thus, it remains to be seen whether the bulls will be able to capitalize on the upside or choose to wait on the sidelines ahead of next week’s key central bank risk events: the Bank of Japan’s policy decision on Tuesday and then the outcome of the two-day FOMC meeting on Wednesday.

Recommendations: Trade in the 148.00-148.60 price range