As the world’s best investment manager and financial market journalist, I bring you the latest updates on the USD/JPY pair. In Thursday’s Asian session, the pair faces selling pressure and drops below the 150.00 psychological level, currently trading around 148.90, down 0.71% on the day.
The US Federal Reserve (Fed) held its key lending rate steady at its July meeting on Wednesday but hinted at possible cuts ‘as soon as’ September. This dovish stance by the Fed, coupled with the Bank of Japan (BoJ) raising interest rates to levels unseen in 15 years, is weighing on the USD/JPY pair.
Traders will be keeping an eye on the US Manufacturing PMI data for July and the weekly Initial Jobless Claims later in the day. The Fed’s decision to leave rates unchanged, with a possibility of a cut in September, is likely to drag the Greenback lower against the Japanese Yen.
On the other hand, the BoJ’s rate hike to 0.25% from 0-0.1% and the tapering of Japanese government bonds signal a hawkish tone. BoJ Governor Kazuo Ueda hinted at another rate hike this year, further boosting the Japanese Yen and creating headwinds for USD/JPY.
Analysis:
The USD/JPY pair is facing downward pressure due to the Fed’s dovish stance and the BoJ’s surprising rate hike. The possibility of a Fed rate cut in September is driving the Greenback lower against the Yen. On the other hand, the BoJ’s hawkish tone and potential for another rate hike are strengthening the Japanese Yen against the USD.
For investors, this means potential opportunities in currency trading, with the USD likely to weaken against the JPY in the near term. It’s essential to monitor economic data and central bank statements for insights into future market movements and make informed investment decisions.