Ella 
USD/JPY remains limited around the 145.45-70 area in Asia on Wednesday. Traders continued to worry about the Bank of Japan’s intervention in foreign exchange markets, as the yen fell to a nine-month low. The pair is currently trading around 145.52, down 0.02% on the day.
Data released on Tuesday showed that Japan’s preliminary GDP in the second quarter grew by 1.5% from the previous quarter, compared with an expected 0.8% and the previous value was 0.7%. A year-on-year increase of 6%, expected 3.1%, and the previous value of 2.7%. Japanese Economy Minister Shigeruyuki Goto said he expected a moderate economic recovery, but also mentioned the need to be mindful of the danger of a global recession and the impact of rising prices. Goto expressed his willingness to respond flexibly to economic and price issues as needed.
However, the monetary policy divergence between the US and Japan has been the main driver of the yen’s weakness. However, the market is happy that the Fed’s interest rate has peaked, which may limit the dollar’s gains. In addition, traders turned cautious amid concerns over the Bank of Japan’s intervention in foreign exchange markets. It’s worth pointing out that the Bank of Japan sold dollars aggressively in September and October of last year as the yen approached the 145 area.
Japanese Finance Minister Junichi Suzuki said on Tuesday that rapid volatility was “not advisable” and that the government was “prepared to respond appropriately,” while stressing that there was no specific level of intervention, Reuters reported.
Across the ocean, U.S. retail sales topped expectations. The month-on-month increase was 0.7%, beating expectations for a 0.4% increase. Sales outside the auto sector came in at 1%, above expectations for a 0.4% gain. On Tuesday, Minnesota Federal Reserve President Neil Kashkari said he was pleased with the progress on inflation, but that inflation remained too high. Kashkari pointed to uncertainty over whether the Fed has done enough or needs to do more.
Market participants will take their cues from economic data. Tonight the US is to release data on building permits, housing starts and industrial production. However, the FOMC meeting minutes will be the key event this week. In terms of the yen, Japan’s trade balance and July national consumer price index will be released on Thursday and Friday respectively.
