The USD/JPY pair is trading around 144.60 in the early Asian session on Thursday, down 0.10% on the day. The weakening of the US Dollar is attributed to rising expectations of a significant interest rate cut by the US Federal Reserve in November. This has put pressure on the USD/JPY pair as investors await economic data and signals from Fed officials on future interest rate cuts. Recent data releases, including a decline in US New Home Sales and a weaker consumer sentiment report, have raised concerns about the health of the US economy and prompted expectations of further rate cuts by the Fed.
Traders have priced in a 57.4% chance of a 50 basis points cut by the Fed in November, while a 42.6% chance of a 25 bps reduction, according to the CME FedWatch Tool. The upcoming speech by Fed Chair Jerome Powell and the release of the final US GDP Annualized for the second quarter will be closely watched for any signals of additional rate cuts or signs of economic weakness. Any indication of further rate reductions by the Fed could put additional pressure on the Greenback in the near term.
On the other hand, the Bank of Japan (BoJ) released minutes of its July policy meeting on Thursday, where members called for a gradual and timely rate increase. Some members suggested raising interest rates to 0.25% to adjust the degree of monetary support, while others recommended a moderate adjustment in monetary support. Finance Minister Shunichi Suzuki stated that the BoJ will take appropriate monetary policy actions while coordinating closely with the government. The potential for the BoJ to delay further rate increases may limit the downside for the USD/JPY pair and undermine the Japanese Yen.
In the Asian trading session, the USD/JPY pair remains under pressure, trading around 144.60 as investors monitor developments in US economic data and signals from the Federal Reserve on future interest rate cuts. The recent decline in US New Home Sales and weaker consumer sentiment have raised concerns about the health of the US economy, leading to expectations of additional rate cuts by the Fed. Traders are closely watching the Fed Chair Jerome Powell’s speech and the release of the final US GDP Annualized for the second quarter for any indications of further monetary easing.
Despite the dovish sentiment surrounding the US Dollar, the Japanese Yen also faces challenges as the Bank of Japan released minutes of its July policy meeting, where members called for a gradual and timely rate increase. The potential for the BoJ to delay further interest rate hikes could undermine the JPY and support the USD/JPY pair. Finance Minister Shunichi Suzuki stated that the central bank will take appropriate monetary policy actions while coordinating with the government. The ongoing dynamics between the US and Japanese central banks will continue to impact the USD/JPY pair in the near term.
