The USD/JPY pair continues to rise, reaching 156.20 in early Asian trading on Tuesday. Despite the Bank of Japan’s decision to reduce purchases of Japanese government bonds and disappointing Nonfarm Payrolls data from last week, the Japanese Yen is weakening against the US Dollar.
Investors will be closely watching key US economic data this week, such as the Producer Price Index (PPI), Consumer Price Index (CPI), and Retail Sales. The PPI figure, which measures wholesale inflation, is expected to increase by 2.2% year-over-year in April. A higher-than-expected PPI could boost the USD against the JPY.
Meanwhile, the Bank of Japan’s move to cut purchases of Japanese government bonds is seen as hawkish, potentially narrowing the gap between Japanese and US bond yields. However, this had minimal impact on the Yen. Japan’s GDP growth for Q1 2024 will be released on Thursday, and a strong reading could strengthen the JPY and limit the upside for the USD/JPY pair in the short term.