USD/JPY looks to approach 148.50 on BoJ’s decision to keep interest rates unchanged

USD/JPY retraces the losses registered on Thursday on the back of a policy rate decision by the Bank of Japan (BoJ). As widely expected, BoJ maintained its current interest rates at -0.1%. The spot price is trading higher around 148.30 during the early trading hours of the European session on Friday.

BOJ Governor Kazuo Ueda conducted the press conference of the post-September policy meeting on Friday. The BoJ Governor has mentioned that the BOJ could contemplate ending yield curve control and adjusting its negative interest rate policy when they believe that achieving 2% inflation is on the horizon.

The policymaker has emphasized that there is "no change to the way of the policy decision-making process," indicating that the BOJ continues to carefully analyze new data at each monetary policy meeting.

Ueda further stated that they have not yet seen inflation reaching a stable 2% level. He also mentioned that the next monetary policy decision in October will be driven by data, including the government's extension of gasoline subsidies.

The BoJ is prepared to implement further easing measures if deemed necessary. Ueda acknowledged that there is a high degree of uncertainty regarding economic conditions, price trends, as well as currency and financial markets.

Japan’s National Consumer Price Index (YoY) report for August printed a reading of 3.2% compared to the previous rate of 3.3%. While National CPI ex-Fresh Food (YoY) remained consistent at 3.1% against the expected 3.0%.

US Dollar Index (DXY) trades higher around 105.40, and these gains can be attributed in part to the positive performance of US Treasury yields. The yield on the 10-year US bond has improved to 4.49% at the time of writing, the highest level since 2007.

Market participants await monitor economic data releases, including the preliminary US S&P Global PMIs for September. These figures may provide valuable insights into the economic conditions in the United States (US) and can assist traders in identifying potential trading opportunities involving the US Dollar (USD).

Recent economic data from the US, released on Thursday, presented a mixed picture. Initially, it strengthened the Greenback, signaling a resilient labor market. However, it later experienced a correction.

US Initial Jobless Claims for the week ending on September 15 reported a figure of 201,000, representing a decrease from the previous reading of 221,000 and reaching the lowest level since January. This data outperformed expectations, as it was anticipated to be higher at 225,000.

The Philadelphia Fed Manufacturing Survey declined to a reading of 13.5 in September, which fell below expectations. Analysts had expected a decrease of only 0.7 from the previous positive reading of 12.

Regarding Existing Home Sales (MoM), August witnessed a decrease to 4.04 million from the previous figure of 4.07 million. Expectations were for an increase to 4.10 million.

As widely anticipated in the market, the Federal Reserve (Fed) chose to maintain interest rates within the 5.25-5.50% range during its Wednesday meeting. Fed Chairman Jerome Powell, during a subsequent press conference, reiterated the Fed's commitment to achieving a 2% inflation target. Powell also mentioned that the Fed is prepared to raise rates if deemed necessary.