The USD/JPY pair declined on Tuesday to around 153.50 at the time of writing, down 0.40% on the day. The Japanese Yen (JPY) attracted fresh safe-haven flows amid renewed global risk aversion.
Fears of potential intervention from Japan’s Ministry of Finance, coupled with the recent hawkish tone from Bank of Japan (BoJ) Governor Kazuo Ueda, lent further support to the JPY. Last week, Ueda hinted that a rate hike could come by the end of this year or early next year, reinforcing expectations of a gradual policy shift by the BoJ.
However, the Japanese Yen’s upside remains limited. Uncertainty over the exact timing of the next BoJ rate increase persists, especially as Japan’s new Prime Minister, Sanae Takaichi, is expected to pursue expansionary fiscal policies. Such a stance could prompt the central bank to proceed cautiously, aiming to avoid derailing economic growth.
In the United States, investors remain focused on the Federal Reserve (Fed) outlook. Recent comments from Fed Chair Jerome Powell emphasized the need to maintain a restrictive stance amid inflation still above 2%, supporting the US Dollar Index (DXY), which hovers around 100.00 on Tuesday.
Markets now assign roughly a 70% chance of a 25-basis-point rate cut in December, down from more than 90% a week ago, according to the CME FedWatch tool.
Against this backdrop, attention turns to Wednesday’s ADP Employment Report, which will provide an early gauge of private-sector hiring trends in the United States. With the prolonged US government shutdown delaying official labor statistics, traders are relying on the private payroll data to reassess monetary policy expectations and the next direction for USD/JPY.
https://bitcoinethereumnews.com/finance/usd-jpy-dips-as-yen-gains-on-safe-haven-flows-boj-rate-hike-signals/