Global markets are worried about the political woes in Tokyo as viral concerns resurfaced in early September and tapping chats are increased among this. Now the market’s wait for key US data and the hope that major central banks will have more time before easing monetary policies. Elsewhere, Japanese Prime Minister Yoshide Suga told reporters that he had no current plans to dismantle the lower house of the country due to the severity of the corona virus situation. However, the national leader showed readiness for a national election.

Local media reported this week that he wanted to dissolve the lower house of parliament in mid-September after next week’s cabinet and party administration reshuffle. According to reports, the premier is considering holding a general election on October 17. Suga’s denial of these statements came after several days of tense negotiations and the intrigues of the infamous prime minister involving the most powerful politicians in Suga and the ruling camp to staying the job. “We can’t dissolve the lower house in this current situation,” said Suga, speaking of the severity of the coronavirus pandemic. Suga’s support ratings are very low because he failed to invest in delivering the Olympics amid a new wave of corona virus infections. The government has declared a fourth state of emergency in most parts of Japan.

As per reuter report “The Bank of Japan must avoid reducing stimulus even if rising raw material costs push up inflation”, deputy governor Masazumi Wakatabe said, reinforcing expectations it will fall behind major counterparts in dialing back crisis-mode policies accompanied by strong domestic demand, cost-push inflation alone will not generate a sustained pick-up in prices toward the central bank’s 2% target. Japan’s economy emerged from last year’s pandemic-induced slump helped by robust global demand. But resurgence in infections and supply chain disruptions have dashed hopes among policymakers for a strong rebound in July-September growth.

Wakatabe said in a speech that “Even if the Fed were to shift to a tightening phase, that alone won’t prod the BOJ to adjust monetary policy,” he said. “It’s crucial to avoid tightening easy monetary conditions prematurely by looking just at near-term moves in the core consumer price index”. Japan’s core consumer prices fell 0.2% in July, slowing to a three – month low on rising food.

The bad news is that Japan’s Kanagawa prefecture has found another bottle of Moderna Inc.’s MRNA.O Covid-19 vaccine, which is suspected to contain foreign substance and has stopped the rest. On Tuesday report, tests on foreign materials before using the vaccine revealed the presence of several black particles in a vial. Japan stopped using 1.63 million doses of modern shots last week and about 3,790 people have already received shots from it. Lots more Modern scenes were suspended in two regions of Japan this week. Mixed catalysts are confusing traders, but with slight optimism printing, US ATP data and ISM production BMI for the month of August will be close to the market ahead of Friday’s job report.

USD/JPY 4 Hour Chart:

Support: 109.69 (S1), 109.39 (S2), 109.20 (S3).

Resistance: 110.18 (R1), 110.38 (R2), 110.68 (R3).

Amidst this above catalysts the traders seems confused on yen. We expect a bullish trend for USD/JPY.