USD/JPY: the week of 21 Sept–25 Sept
The 30-second summary
USD/JPY traded through a week dominated by US central bank speeches, economic data releases, and Japanese Purchasing Managers' Index data. Stronger US Manufacturing and Services PMIs alongside low US Initial Jobless Claims highlighted American economic resilience, whilst Japanese Services PMI slowed to 51.6. Prepared traders had to navigate multiple scheduled events while maintaining strict risk discipline.
The week at a glance
Monday 21 September
Cautious Sentiment Ahead of Central Bank Speeches
Market participants maintained a watchful stance while digesting the US Chicago Fed National Activity Index print of -0.04 and commentary from Federal Reserve officials.
Tuesday 22 September
US Yield Shifts and Heavy Speech Calendar
US Treasury 2-year note auction yields rose to 4.787%, while weekly ADP employment change came in at 20K alongside speeches from Fed officials and President Trump.
Wednesday 23 September
Robust US PMI Releases Trigger Dollar Activity
US Manufacturing PMI printed at 57.0 and Services PMI reached 58.7, outperforming expectations and generating momentum during the New York session.
Thursday 24 September
Japanese PMI Softening and Positive US Labour Figures
Japan Services PMI slowed to 51.6, while US Initial Jobless Claims fell to 197K, pointing to tight American labour conditions.
Friday 25 September
US Data Stream and CFTC Positioning Updates
Trading wrapped up with US Durable Goods and Michigan sentiment reports, alongside a CFTC positioning update indicating shifting net short exposures.
What moved the market
- Stronger US Manufacturing PMI (57.0) and Services PMI (58.7) on Wednesday that beat market forecasts.
- US labour market resilience indicated by Initial Jobless Claims printing below expectations at 197K.
- Slowing Japanese service sector activity, with Japan Services PMI slipping from 52.5 to 51.6.
- Higher US Treasury auction yields, including the 2-year note auction clearing at 4.787% and 5-year note at 5.033%.
- Frequent speeches from Federal Reserve policymakers throughout the week maintaining focus on monetary policy.
What traders could have done
- Monitored scheduled US economic releases such as flash PMIs and weekly jobless claims to manage exposure ahead of potential volatility.
- Observed Japanese PMI data during the Asian session transition to evaluate potential early-day sentiment shifts in JPY pairs.
- Maintained strict risk management parameters during periods of dense central bank rhetoric to protect against sudden headline spikes.
Lessons from the week
Lesson 1
Event Risk Management
When high-impact releases such as PMI surveys and labour figures align with scheduled speeches, spread widening and sudden volatility necessitate clear stop-loss placement and position sizing.
Lesson 2
Divergent Economic Indicators
Tracking relative macroeconomic strength between economies, such as robust US service sector growth against slowing Japanese services PMI, provides essential context for currency behaviour.
Lesson 3
Treasury Yield Sensitivity
Note auctions and yield shifts in benchmark government bonds can heavily influence foreign exchange valuations, making bond market tracking a vital tool for FX traders.