Is the trend changing for USD/JPY?

Risk Sentiment Improves As ISM Manufacturing Prices Take A Dive

Posted Thursday, June 1, 2023 by
Skerdian Meta • 1 min read

The USD turned bullish in early May as the case for another rate hike from the FED grew stronger, not that it is needed, after retreating lower since October. The decline in inflation has slowed and certain inflation indicators ticked higher last month.

USD/JPY has been bullish for months, gaining more than 10 cents and recently the upside picked up further pace, pushing the price to 141. But, this week we have been seeing a reversal which has sent the price below 139 and moving averages are turning into resistance, which implies a trend reversal for now.

May US Manufacturing Data from ISM

ISM manufacturing May 2023

Prices paid
  • May ISM manufacturing 46.9 points vs 47.0 expected
  • April ISM manufacturing was was 47.1 points


  • Manufacturing PMI 46.9 points versus 47.1 last month
  • Prices paid 44.2 points versus 52.0 estimate and 53.2 last month
  • Employment 51.4 versus 50.2 last month
  • New orders 42.6 versus 45.7 last month
  • Production 51.1 versus 48.9 last month
  • Supply deliveries 43.5 versus 44.6 last month
  • Inventories 45.8 versus 46.3 last month
  • Customer inventories 51.4 versus 51.3 last month
  • Backlog of orders 37.5 versus 43.1 last month
  • New export orders 50.0 versus 49.8 last month
  • Imports 47.3 versus 49.9 last month

The prices paid number stands out in a big way and we’ve seen fresh US dollar retreat on the headlines, with USD/JPY touching 138.47, down 85 pips.

Revisions to the Q1 Productivity Report

  • May US Q1 unit labor costs 4.2% vs 6.0% expected
  • Prelim Q unit labour costs were 6.3%
  • April labour costs were +3.2%
  • May Productivity -2.1% vs -2.5% expected
  • Prior productivity -2.7%

These numbers are known for being difficult to calculate accurately, but if anything, they are showing lower inflationary pressures than initially expected. As a result, there is increased demand for bonds, and the value of the dollar is declining based on this information.

USD/JPY Live Chart

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