The USDJPY pair ticked higher on Wednesday and was trading near the 114 level during the US session as rising stocks and rising yields spurred demand for the USDJPY pair.
Traders paid attention to today’s US GDP preliminary data for the third quarter, which came out at 3.5% and sent a strong message, that the US economy is still outpacing other G7 countries. However, most economists expect the economic activity to slow down over the next quarters as Trump’s tax cuts positive influence on the GDP growth will fade out. Moreover, the GDP price index remained at 1.7% on the yearly basis.
Later in the day, the Fed’s chair Jerome Powell is due to deliver a speech titled "The Federal Reserve's Framework for Monitoring Financial Stability" at The Economic Club of New York. The market will look for any clues in his remarks about a possible pause in the rate hikes, due to deteriorating economic numbers recently.
However, on Tuesday Mr. Richard Clarida backed the gradual rate hikes approach, despite the recent slump on the stock markets. Thus, today’s market hopes for a dovish Powell might be overrated and the greenback could continue higher, should Powell confirm the hawkish bias at the Fed.
US yields moved higher today and it would appear that the latest decline might be over, with the whole yield curve rising on Wednesday.
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