US data was disappointing with the lower-than-expected new Home Sales which declined 18.2% MoM in February, well below expectations of a 5.7% drop.

”Part of this drop reflects freezing weather conditions in February reducing activity in some parts of the US, alongside limited supply. The median sales price rose 5.3% YoY,” said an Analyst.

In the meantime, the lockdowns in Europe and Fed Chair Powell’s comments downplaying the effects of inflation resulted into the mix on a choppy day for Wall Street. Opposite to Fed’s Powell, Dallas Fed’s Kaplan who is a non-voter was advocating hikes and as one of the Fed officials signalling a hike in 2022 in the dot plot projections. Kaplan anticipates 6% growth for 2021, unemployment at 4%, inflation between 2.25% and 2.5%, and 10yr yields between 1.75% and 2.00%.

On the other hand, As per a private sector survey on Wednesday, an expansion of Japan’s factory activity gathered pace in March which is helped with the prospect of a global economic recovery because increasing number of countries roll out COVID-19 vaccines.

But the service sector remained depressed, with businesses suffering from the coronavirus pandemic’s fallout even after the government lifted a state of emergency in the Tokyo region.

Elsewhere, The Bank of Japan need to seek ways to encourage corporate investment to promote digitalisation and a carbon-free society, one of its board members said at a January meeting, suggesting that the idea could emerge as a future policy option.

Meeting for a rate review weeks after the government rolled out fresh curbs to prevent the spread of the coronavirus pandemic, BOJ policymakers warned of various risks that cloud their projections of a moderate economic recovery.

“It’s important to encourage corporate activities for future growth such as research and development investment, business portfolio reforms, and efforts on digitalisation and decarbonisation,” one of the members was quoted as saying.

“It’s crucial for the BOJ to devise monetary policy means to boost firms’ and households’ growth expectations by showing its determination to never allow a return to deflation,” the member said. Another member, however, said it was “not easy” to use monetary policy to address the structural challenges faced by Japan’s economy, the minutes showed.

USD/JPY 4 Hour Chart:

Support: 108.39 (S1), 108.16 (S2), 107.92 (S3).

Resistance: 108.86 (R1), 109.10 (R2), 109.32 (R3).

All the catalysts creates mixed market sentiment confusing the yen traders. As of now, we expect a mixed trend for USD/JPY.

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