USDJPY may likely see 97.22 ahead of Fed minutes – BNPP

Research Team at BNP Paribas, suggests that the USD continues to struggle as market reluctance to price Fed tightening leaves the US currency vulnerable.

Key Quotes

“Our clearest signal comes from our short-term STEER™ model for USDJPY which currently points to 97.22, supporting the move this morning overnight to 100. We expect data and Fed commentary to gradually guide markets towards pricing a Fed rate hike in September, which should ultimately support the USD – focusing on this wek’s FOMC minutes then the August 26 Yellen speech at Jackson Hole. However, data in the very near term may not be particularly supportive.

Today, we agree with market consensus that the CPI y/y rate likely moderated to 0.9% from 1.0% in July while industrial production gains likely slowed to 0.2% m/m from 0.6%. In contrast, Fed communication may be more supportive for the USD in the near-term. Atlanta Fed President Lockhart speaks on Tuesday ahead of the release of the FOMC’s July minutes on Wednesday and a speech from New York Fed president Dudley on Thursday. We expect key policy makers to signal that renewed rate hikes are under consideration.”