Japanese Yen bears are now ready to give up, with the BoJ’s decision on Thursday awaiting.
Japanese Yen (JPY) edged higher versus the US dollar during the Asian session on Wednesday, but there was no follow-through purchasing, and it remained close to a three-month low reached earlier this week. Fears that Japanese authorities will intervene in the market to prop up the native currency prove to be a crucial factor supporting the JPY. That being considered, the upside remains limited the aftermath of the uncertainties around the Bank of Japan’s (BoJ) rate rise plans.
The uncertainties around the Bank of Japan’s rate hikes, along with an upbeat market attitude, continue to damage the JPY.
Investors now believe that Japan’s ruling coalition’s loss of the legislative majority will make it more difficult for the BoJ to tighten monetary policy further. Furthermore, the current risk-on climate limits gains for the safe-haven JPY. Furthermore, the development of some US Dollar (USD) dip-buying serves as a tailwind for the USDJPY pair as traders await the critical BoJ decision and major US economic data this week for a new impetus.
Daily Market Movers: Japanese Yen may continue its struggle to show any substantial comeback.
Japan’s Economy Minister Ryosei Akazawa stated on Tuesday that a weaker yen can push up costs through greater Import costs, combined with slower wage growth, would reduce real household income and dampen private consumption.
Earlier, Japan’s Finance Minister Katsunobu Kato emphasized that the authorities will closely monitor foreign exchange movements, including those led by speculators, with increased vigilance, fuelling concerns of a potential government intervention.
The political turbulence in Japan adds to doubt regarding the Bank of Japan’s rate-hike prospects, which, in turn, should hinder the Japanese Yen from strengthening significantly in light of the pervasive risk-on atmosphere.
The US dollar remains on the defensive below its highest level since July 30 achieved on Tuesday, dragging the USDJPY pair away from a three-month high, but the The downside restricted ahead of this week’s significant central bank event/data risks.
Traders are now focusing on the vital BoJ policy decision and important US macro data this week.
The BoJ expected to announce its policy decision at the end of a two-day meeting on Thursday. This week, investors will also face key US macroeconomic announcements, which could provide new clues about the Federal Reserve’s rate stance.
Investors are anticipating a slower pace of Fed interest rate decreases as a slew of positive economic data released recently indicated to the underlying strength of the US economy, which has been pushing US Treasury bond yields higher.
The Conference Board announced on Tuesday that the US Consumer Confidence Index saw its greatest single-month advance since March 2021, rising to 108.7 in October, a nine-month high, from an upwardly revised 99.2 in the previous month.
This reflected optimism in business conditions, the labor market, and incomes, balancing a somewhat disappointing Job Openings and Labor Turnover Survey, or JOLTS report, which showed that vacancies fell to more than a three-and-a-half-year low in September.
Concerns have been raised that Vice President Kamala Harris’ and Republican contender Donald Trump’s spending plans may increase the budget deficit, contributing to the recent increase in US bond yields.
Traders are now eyeing Wednesday’s US economic calendar, which includes the release of the ADP data on private-sector jobs and the Advance GDP report, which is likely to reveal that the economy expanded at a 3% annualized rate in Q3.
