- USD/JPY gains some follow-through traction on Wednesday and hits a fresh 24-year high.
- The Fed-BoJ policy divergence, dismal domestic data weigh on the JPY and extend support.
- Bulls turn cautious amid fears of intervention and ahead of the key FOMC meeting minutes.
The USD/JPY pair builds on its steady uptrend witnessed over the past week or so and climbs to a fresh 24-year high on Wednesday. The pair maintains its bid tone through the first half of the European session and holds comfortably above the 146.00 round-figure mark.
The Japanese yen takes a fresh hit following the release of the downbeat domestic data, showing that machinery orders fell more than expected in August. This, along with a big divergence in the monetary policy stance adopted by the Bank of Japan (dovish) and other major central banks (hawkish), continues to push the USD/JPY pair higher for the sixth successive day.
In fact, the BoJ, so far, has shown no intent to hike interest rates and lags in the process of policy normalisation. Adding to this, Japan's Prime Minister Fumio Kishida said on Tuesday that the BoJ needs to stick to its ultra-lose policy setting until wages rise. In contrast, the Fed is expected to stick to its faster rate hiking cycle to combat stubbornly high inflation.
The recent hawkish comments by several Fed officials, along with Friday's robust US jobs report, lifted bets for another supersized 75 bps rate increase by the US central bank in November. This remains supportive of elevated US Treasury bond yields, widening the US-Japan rate differential and supporting prospects for an extension of the well-established bullish trend.
That said, speculations for more currency market intervention by Japanese authorities hold back traders from placing fresh bullish bets around the USD/JPY pair. Japan's Finance Minister Shunichi Suzuki reiterated earlier this week that the government stands ready to intervene and respond appropriately to excess FX moves. This, in turn, is capping the upside for spot prices.
Traders also seem reluctant and prefer to move to the sidelines the FOMC meeting minutes, due for release later during the US session on Wednesday. The minutes will be closely scrutinized for clues about the Fed's rate hike path, which will play a key role in influencing the USD price dynamics and provide some impetus to the USD/JPY pair ahead of the US CPI report on Thursday.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.