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One hot topic right now is the impact of the weaker Japanese Yen on import costs and inflation. As the Yen continues to weaken, there is concern about how this could affect household spending and the overall Japanese economy. Keep an eye out for inflation numbers from Tokyo, as they will give us a glimpse into the effects of the weaker Yen on consumer prices. The Bank of Japan will also be making its April monetary policy decision, which could spark discussions about potential rate hikes.
Over in the US, the Chicago Fed National Activity Index (CFNAI) will be in focus next week. Economists are anticipating an increase in the index, which could support market expectations that the US will avoid a recession. However, higher-than-expected numbers may impact investor sentiment regarding potential Fed rate cuts in 2024.
A strong US economy could lead to tight labor market conditions and wage growth, which in turn could boost disposable income and consumer spending. But a higher-for-longer Fed rate path could also raise borrowing costs and reduce disposable income. The chances of the Fed holding interest rates at 5.5% in September have increased, according to the CME FedWatch Tool.
Looking ahead, the near-term forecast for the USD/JPY pair will likely be influenced by inflation numbers from both Japan and the US. Keep an eye out for any surprises in the data, as they could impact investor bets on potential rate hikes or cuts. Stay informed with Extreme Investor Network for all the latest news and analysis in the world of trading and finance.
