US stock trading opened higher on Wall Street as the markets turned their attention from the US Federal Reserve Bank to more corporate earnings and economic reports. At the same time, the direction of the currency pair USD/JPY remained upward and stable around its gains, which exceeded the resistance level of 146.74 near its highest level in nine months.
According to trading, the S&P 500 rose by 0.7% in early trading on Monday. The Dow Jones index rose 274 points, or 0.8%, and the Nasdaq Composite Index rose 0.8%. US stocks snapped a three-week losing streak last week as investors seemed comfortable with Federal Reserve Chairman Jerome Powell saying the US central bank would "move cautiously" on interest rates.
The Wall Street markets are preparing for a modestly higher opening as attention shifts from the Federal Reserve Bank to more corporate profits and new economic data that can provide clues about the health of the American economy. Wall Street indices appeared to have broken out of recession on Friday after Federal Reserve Chairman Jerome Powell said the US central bank would "act cautiously" on interest rates.
In a long-awaited speech, Powell said on Friday that the Fed will base its next decisions on US interest rates on the latest data on inflation and the economy. He added that although inflation has come down from its peak, it is still very high and the Federal Reserve may raise US interest rates again, if necessary. Some market watchers were hoping that Powell would say that the Fed was done raising interest rates. The high interest rates work to control inflation, but at the expense of slowing down the economy and damaging investment prices.
But Powell was also careful to say that he is aware of the dangers of exaggerating interest rates and causing "unnecessary damage to the economy." Accordingly, the analysts said that the comments were not completely different from what Powell had said before. Indeed, the Federal Reserve has raised the key interest rate to the highest level since 2001 in an effort to reduce high inflation. That is up from almost zero early last year. High interest rates led to a contraction in manufacturing and helped cause the bankruptcy of three prominent US banks, while also helping to slow inflation.
The economic reports affecting the market this week include US consumer confidence and the second gross domestic product estimate and a wave of labor market data and the consumer spending report which includes a closely watched measure of inflation.
Expectations of the dollar against the Japanese yen today:
- The general trend of the USD/JPY currency pair is still upward.
- Despite the technical indicators reaching strong oversaturation levels due to its recent gains, there will not be strong sales to take profits without real Japanese intervention.
- This week has been disappointing for the hopes of a tightening of the policy of the American central bank.
- Currently the closest resistance levels for the dollar/yen currency pair are 146.85, 147.20 and 148.00 respectively.
There will be no reversal of the trend without moving the currency pair towards the support level of 142.00. Today, the currency pair will be affected by the announcement of American consumer confidence and job opportunities in the country.
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