US Economic Data and Fed Outlook
While traders consider intervention threats and the chances of a BoJ rate hike, US economic indicators could trigger USD/JPY price volatility on Wednesday, November 5. Two key economic reports may affect expectations for a Fed rate cut in December.
ADP Employment Report
Economists forecast the ADP to report employment to rise by 24k in October after falling by 32k in September. A larger-than-expected increase may temper bets on further policy easing in December, potentially sending USD/JPY toward 155.
On the other hand, an unexpected fall in employment could overshadow concerns about inflation and raise bets on a December cut. A more dovish Fed rate path may send USD/JPY toward 150.
ISM Services PMI
While labor market data will influence the Fed’s rate path, services sector data could have a greater impact, given that the sector accounts for around 80% of US GDP.
Economists expect the ISM Services PMI to rise from 50.0 in September to 50.7 in October. A higher PMI reading, combined with rising prices, could support a more hawkish Fed policy stance, sending USD/JPY toward 155. Conversely, a drop below the 50 neutral level and softer services sector inflation may revive expectations of a December cut. A more dovish Fed rate path could push the pair below 153, exposing the 150 level.
