Japanese yen continues its consolidative price ahead of reduced bets for a December BoJ rate hike.
Heading into Tuesday’s European session, the Japanese yen (JPY) is still struggling to draw in any significant buyers and is trading close to a three-week low compared to its American equivalent.
Demand for the safe-haven JPY also weakened by high US bond yields and a bullish risk attitude.
The safe-haven JPY still being weakened by a bullish risk tone and firming views that the Bank of Japan (BoJ) will maintain short-term interest rates unchange later this week. Furthermore, wagers expecting a less dovish Another factor affecting the lower-yielding JPY the Federal Reserve’s (Fed) continue support for high US Treasury bond yields.
However, the JPY bears now appear hesitant to make bold wagers and choose to stay out of the market ahead of the major central bank event risks. On Wednesday, the Fed expected to make its policy announcement, and on Thursday, the BoJ. Meanwhile, the USDJPY pair should benefit from a bullish US dollar (USD). For a quick boost, traders now turn to the US retail sales. Nonetheless, the fundamental background supports the possibility of more increases for the currency pair and indicates that the JPY’s path of least resistance is downward.
Daily Market Update: The Japanese yen has difficulties to entice purchasers in the face of BoJ uncertainty.
The Japanese yen pair reached a thrdee week high on Monday as the Japanese yen continued to weaken due to expectations that the Bank of Japan will maintain interest rates at the conclusion of a two-day meeting on Thursday.
Ryosei Akazawa, Japan’s minister of economy, stated on Tuesday that the central bank should manage the details of monetary policy and that the government and the BoJ will collaborate to implement proper monetary policy.
In response to statistics indicating that a significant portion of the US economy grew at the strongest rate in over three years, the yield on the benchmark 10-year US government bond increased to its highest level since November 22.
The S&P Global Flash Purchase Managers for Services The Composite PMI jumped from 54.9 in November to 56.6, a 33-month high, while the PMI increased from 56.1 to 58.5 in December, the highest level in 38 months.
Market wagers that the Federal Reserve will probably imply a slower pace of policy easing moving forward were reinforced by this, which overshadow the flash US Manufacturing PMI’s decline to a three-month low of 48.3 in December.
USDJPY pair remains capped, and US dollar bulls remain on the defensive.
The USDJPY pair remains capped, and US dollar bulls remain on the defensive, as markets have completely priced in the Fed’s 25 basis point rate cut on Wednesday, according to the CME Group’s FedWatch Tool.
In addition to the US bond yields, traders now anticipate the release of the US monthly Retail Sales data. will generate short-term possibilities around the USD pair and fuel demand for it.
However, the outcome of the highly anticipated FOMC meeting on Wednesday and the significant BoJ decision on Thursday will continue to be the main focus, as they should give the JPY a new direction.
