Key events today:

15.08 12:30 UTC: USD – Retail Sales Change.

14.08 23:50 UTC: JPY – GDP Change.

Despite some profit-taking after the rise to 148.0, the pair remains supported by monetary policy divergence. The yield on 10-year UST is approaching 4.46%, while the equivalent JGBs hold near 0.82% even after the YCC target band was widened in the summer.

Weak Japanese economic performance increases the likelihood that the Bank of Japan will delay further tightening: real wages have been falling for six consecutive months, and core CPI has slowed to 2.4% y/y, reducing pressure on the regulator to normalize policy. At the same time, Japan’s Ministry of Finance refrains from verbal interventions, being content with levels above 145.0, which reduces the risk of aggressive dollar selling. Global risk appetite, following strong US PPI data, remains moderate, which traditionally prompts capital flows into US assets and supports the USD against the JPY.

Recommendations: BUY 147.30, SL 147.10, TP 148.40.