Week in revew
The USD/JPY opened the week at 147.23. The dollar traded firmly from the start of the week and the pair rose to below 148.50 during Tokyo trading on 19 August after reports that a major US credit rating agency maintained its rating on USTs. The pair failed to test higher levels and became top-heavy, edging lower on 20 August. News that President Donald Trump pressured Fed Governor Lisa Cook to resign briefly pushed the USD/JPY below 147. However, the pair recovered after the minutes of the July FOMC meeting were released and assessed as somewhat hawkish due to their focus on inflation. The dollar regained upward momentum ahead of the Jackson Hole Symposium on 22 August. The stronger-than-expected US manufacturing PMI released on 21 August added further support to the dollar, helping the USD/JPY recover above 148, break through the high reached on 19 August, and climb past 148.50, the highest level since 1 August (Figure 1). The dollar strengthened broadly this week. The rally reflected a partial unwinding of last week's dollar selling as expectations for the resumption of rate cuts faded somewhat ahead of Fed Chair Jay Powell's speech on 22 August. The Australian and New Zealand dollars, both of which saw rate cuts last week, were relatively weak (Figure 2).
FIGURE 1: USD/JPY
Note: As at 13:00 JST on 22 August
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: As at 13:00 JST on 22 August
Source: Bloomberg, MUFG
