Core consumer prices in Tokyo fell 0.3% in August from a year earlier, government data showed on Friday. The core consumer price index for Japan’s capital, which includes oil products but excludes fresh food prices, compared with economists’ median estimate for a 0.3% annual rise. Furthermore, the ex-Food and Energy CPI data lagged below 0.5% market consensus and 0.6% prior with -0.1% actual.

Fed Chair Powell announced a robust updating of the Fed’s monetary policy framework during his virtual speech at the Jackson Hole Symposium on August 27th, 2020. The Fed’s new approach could be viewed as a flexible form of average inflation targeting, allowing inflation to run moderately above or below the Fed’s 2% target for some time. This means that interest rates could be left lower for a longer period despite a rise in inflation. Regarding employment, the revised statement reflects the Fed’s view that a robust job market can be sustained without causing an outbreak of inflation and the maximum level of employment is a broad-based and inclusive goal.

The Federal Reserve has left the target range for its federal funds rate unchanged at 0-0.25 percent on July 29th, 2020 but opened the door for further monetary easing to support the world’s largest economy through the pandemic.

Adding to the upbeat mood are talks concerning the US corona virus (COVID-19) stimulus package. After a 25-minute phone call between the House Speaker Nancy Pelosi and White House chief of staff Mark Meadows, Pelosi issued a statement saying “this conversation made clear that the White House continues to disregard the needs of the American people as the corona virus crisis devastates lives and livelihoods.”She said the sides stood at a “tragic impasse” after the Trump administration again did not meet her demand to roughly double the price of its aid proposal to $2.2 trillion.

“Democrats are willing to resume negotiations once Republicans start to take this process seriously.  Lives, livelihoods, and the life of our democracy are at stake,” the California Democrat said in the statement.

On the other hand, news that Japan’s Prime Minister (PM) Shinzo Abe is planning to provide the virus vaccine for the entire nation offers additional strength to the market optimism.

USD/JPY 4 Hour Chart:

Support: 105.87 (S1), 105.19 (S2), 104.77 (S3).

Resistance: 106.97 (R1), 107.38 (R2), 108.06 (R3).

Looking forward, traders will keep eyes on the risk catalysts amid a lack of major data/events in Asia. However, the broad risk-on mood can keep the quote on the positive side unless wither any worrisome comments roll out of Wyoming or the US data mark heavy declines.