USD/JPY leaps above mid-112s as DXY rebounds
The USD/JPY pair gained around 50-pips after the second set of data from the U.S. carried the US Dollar Index above the 93 mark. As of writing, the pair was trading at 112.62, gaining 0.28% on the day.
The first batch of data from the U.S. triggered a short-lived USD sell-off, pushing the DXY to a fresh two-day low at 92.80. Inflation measured by the PCE price index dropped to its lowest level since November 2015 at 1.3% on a yearly basis in August. İmpacted negatively by hurricanes Harvey and Irma, personal spending eased to 0.1% from 0.3% in July and personal income rose 0.2% on a monthly basis.
According to the latter data released by the ISM, Chicago PMI jumped to its best level in nearly three years at 65.2 with the employment sub-index retaking the 50 mark and inflationary pressures at factory gate increasing to its highest level since 2011. Moreover, despite a slight downgrade to the final reading of the University of Michigan Consumer Sentiment Index, Surveys of Consumers chief economist, Richard Curtin noted "in the first nine months of 2017, the Sentiment Index averaged 96.2, just ahead of averages of 91.9 and 92.9 recorded in the prior two years, making 2017 the highest recorded since 2000."
- US Dollar around 93.00 on US releases
At the moment, the US Dollar Index is at 93.05, gaining 0.1% on the day and is looking to close the week with its best percentage increase since late March as markets are pricing a 76.4% probability of a December rate hike according to the CME Group FedWatch Tool.
Technical outlook
The initial hurdle for the pair aligns at 113.00 (psychological level) ahead of 113.50 (Jul. 14 high) and 114.50 (Jul. 11 high). On the downside, supports could be seen at 112.00 (psychological level), 111.45 (200-DMA) and 110.90 (100-DMA).
- USD/JPY still targets 113.80 – UOB
Today's data from the U.S.
- US: Personal income increased $28.6 billion (0.2%) in August
- ISM: September Chicago Business Barometer rises sharply to 65.2
- UoM: Consumer sentiment remained largely unchanged