Ella 
The USD/JPY is trading in positive territory for the sixth consecutive day during Monday’s Asian trading hours. The pair’s bullishness is being supported by higher US Treasury yields and hawkish comments from Federal Reserve (Fed) Chairman Jerome Powell. The pair is currently trading around the 151.70 level, up 0.10% for the day.
The Federal Reserve (Fed) reiterated that the central bank will not hesitate to tighten policy further if necessary to bring inflation down to 2%. While the views of other FOMC members are flexible and open to additional tightening if warranted by the data.
On Friday, the University of Michigan’s preliminary consumer sentiment index for November fell to 60.4 from 63.8, below the market consensus of 63.7. The UoM’s 12-month inflation expectations jumped to 4.4% from 4.2%, while 5-year expectations climbed to 3.2% from 3.0%.
Investors are looking to Friday’s U.S. inflation data for fresh impetus. A stronger-than-expected reading could increase the chances of a Fed rate hike at the December meeting. This, in turn, could boost the US dollar and act as a tailwind for the USD/JPY pair. According to the CME Fedwatch tool, Fed funds futures have priced in a 14.4% probability of another rate hike at the December meeting.
On the other hand, potential foreign-exchange intervention by the Japanese government could limit the pair’s upside. Last week, Bank of Japan (BoJ) Governor Kazuo Ueda said that the BoJ will exit from ultra-loose monetary policy with caution to avoid significant volatility in the bond market. He added that Japan is moving toward the central bank’s 2% inflation target, with a cycle of rising wages and domestic demand-driven inflation gaining momentum.
On Tuesday, market participants will be watching the U.S. Consumer Price Index (CPI) for October. On Wednesday, the Japanese Gross Domestic Product (GDP) for the third quarter (Q3) will be released, which is expected to show a 0.1% quarter-on-quarter contraction after a 1.2% expansion in the previous quarter.
