USD/JPY holds positive ground near 147.50, investors await US data

• USD/JPY holds ground near 147.50, gaining 0.02% on the day.
• The upbeat US data on Thursday indicate that the US economy remains resilient and inflation rebounded in August.
• BoJ said a pivot would not be considered if wage and inflation data do not reach its forecast.

The USD/JPY pair hovers around 147.50 after retracing from 147.70 during the early European trading hours on Friday. Meanwhile, the US Dollar Index (DXY) trades near its highest daily close since March near 105.30, supported by the robust US economic data. Market players will take cues from the preliminary University of Michigan (UoM) Consumer Confidence survey ahead of the Federal Open Market Committee (FOMC) meeting next week.

On Thursday, the Bureau of Labor Statistics revealed that the August Producer Price Index (PPI) grew 1.5% YoY from 0.8% in the previous reading and above the expectation. The annual Core figure fell from 2.4% to 2.2%. Meanwhile, Retail Sales grew by 0.6% MoM in August, beating estimations of 0.2%. Furthermore, the US Department of Labor reported that weekly Initial Jobless Claims totaled 220,000 from 217,000, below the market consensus of 225,000. These figures indicated that the US economy remains resilient and inflation rebounded in August.

However, the Federal Reserve's (Fed) monetary policy expectations were not significantly altered by these figures. Markets anticipate that the Fed will maintain its interest rate at its meeting scheduled for next week. In the meantime, the hawkish stance from the Fed remains in favor of US bond yields and USD for the time being.

On the Japanese Yen front, the Bank of Japan (BoJ) policymaker stated that an exit from an ultra-easy policy will not be considered as long as wage and inflation data do not meet expectations, leaving the JPY vulnerable against its rivals.

On Thursday, Japan’s Machinery Orders fell 13% in July versus -5.8% prior On a monthly basis, the figure dropped 1.1% from a 2.7% rise in June. Both figures came in below the market consensus. Despite the dovish tone of BoJ officials, the disappointing data fails to lift the Japanese Yen (JPY).

Market participants will monitor the release of the US Empire State Manufacturing Index, Industrial Production, and the University of Michigan Consumer Confidence survey. These figures could offer hints about the peak interest rate by the Federal Reserve (Fed) for the rest of the year ahead of the Fed meeting next week.