USD/JPY heads to worst weekly performance in three months

US dollar fell for the fourth session in a row, to its lowest level since January 3, heading to the lowest weekly performance since March against the Japanese yen following developments and economic data released by the Japanese economy and on the threshold of an economic data release expected today by the US economy, the world's largest economy.

As of 05:51 GMT, USD/JPY declined by 0.15% to 107.14 from the opening levels of 107.30 after the pair hit a 5-month low of 107.05, while the highest in the session at 107.37.

We have followed the release of the preliminary reading of Japan's Markit Industrial PMI's, which showed a contraction of 49.5 versus 49.8 in May, unlike expectations of a 50.0 expansion, as a reading below 50 indicates a contraction of the sector, while a reading at 50 or higher reflects an expansion of the sector.

In addition, on Thursday we have followed the Bank of Japan's decision to keep interest rates at 0.10%, which was expected in the markets, coinciding with the disclosure of the monetary policy statement, during which the Japanese central bank raised concerns about external risks that threaten to impede the fragile economic recovery , Amid referencing the weak exports, which is the nerve of the third largest economy in the world in addition to the decline of the industrial sector recently.

On the other hand, investors are currently waiting for the US economy to disclose its preliminary reading for the manufacturing and services PMI index, amid expectations for a stability of the expansion of the manufacturing sector at 50.5, unchanged from the previous reading, compared to 50.6 In May, and the service sector expected to rise to 51.0 compared with the initial reading of 50.9 versus 53.0 in May.

This comes ahead of the release of housing market data with the Existing Home Sales Index reading, which could reflect a 1.2% rise to 5.29 million homes versus a 0.4% drop at 5.19 million homes during last April, in addition to Fed Governor Lael Brainard speech at the opening of the monetary policy summit of the Federal Reserve Bank of Cleveland in Cincinnati.

The Federal Reserve policy makers kept short-term benchmark interest rates between 2.25% and 2.50% for the fourth meeting in a row, with the unveil of the Federal Commission's forecasts of growth rates, inflation and unemployment as well as future interest rates for the next three years.

On Wednesday, the Federal Reserve dropped the word "patient" from its statement, adding that they will act as necessary to maintain the economy, which reflects the possibility of a cut in federal interest rates later. In particular, the Federal Reserve's interest rate forecasts showed that eight Members see a reduction this year, while the average forecast did not reflect any reduction this year, but next year 2020.

Fed Governor Jerome Powell said at a press conference after the meeting in Washington that some monetary policy makers in the Fed committee believe that the issue of soft monetary policy has been boosted, stressing that the committee will continue to monitor the developments and economic data closely during the coming period to determine the future Monetary policy depending on those factors.