The Dollar/Yen is trading slightly lower early Monday. Traders are reacting to firm demand for higher risk assets and slightly higher U.S. Treasury yields. On Friday, the yen recovered from a six-month low against the Greenback.
At 0047 GMT, the USD/JPY is trading 112.429, up 0.080 or +0.07%.
Last week, the Dollar/Yen was driven higher in reaction to robust U.S. producer and consumer inflation data that supported the Fed’s plan to raise interest rates at least two more times in 2018. Upbeat comments on the U.S. economy from Federal Reserve Chairman Jerome Powell also stoked demand for the dollar.
Last Thursday, Fed chief Powell said in a Marketplace radio interview he believes the U.S. economy remains in a “good place,” with recent government tax and spending programs likely to boost growth for perhaps three years.
On Friday, the Fed released its semiannual report on monetary policy before Powell’s scheduled testimony to Congress this week on Tuesday and Wednesday. The report showed solid U.S. economic growth and the Fed expecting to keep raising rates gradually.
Also on Friday, the USD/JPY weakened after University of Michigan Consumer Confidence data fell more than expected. This encouraged Dollar/Yen bulls to book profits after the Forex pair hit a six-month high earlier in the session.