The USD/JPY pair is showing a slight decline around 146.50 amid weakness in the US Dollar. With the Federal Reserve expected to start reducing interest rates in September, investors are closely watching Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole Symposium.
Market sentiment remains positive as the Fed is likely to shift towards policy normalization next month. This has led to a decline in the US Dollar Index (DXY) and an outperformance of riskier currencies against the USD.
On the economic front, all eyes are on the US S&P Global Purchasing Managers’ Index (PMI) data for August, which will be released later this week.
Meanwhile, the Japanese Yen is performing well following strong Q2 GDP growth, raising expectations for more rate hikes by the Bank of Japan. The Japanese economy expanded by 0.8% in the second quarter, exceeding initial estimates.
Analysis:
The USD/JPY pair is facing downward pressure as the Fed gears up for interest rate cuts, leading to a weaker US Dollar. Investors are optimistic about the Fed’s shift towards policy normalization in September, impacting currency markets globally. With Japan’s strong GDP growth, the Yen is expected to strengthen further, potentially affecting global trade and investment flows.