- USD/JPY starts the week with an attempt to halt the gains ahead of central banks policy decisions this week.
- US Dollar (USD) weakened after the release of the US Consumer Sentiment Index on Friday.
- Japanese Yen (JPY) has retraced all the gains it experienced in response to the comments made by BoJ Governor Kazuo Ueda in the previous week.
- No alterations to the ultra-loose policy are expected by BoJ in the upcoming policy meeting.
USD/JPY kicks off the week with an attempt to halt the winning streak, trading lower around 147.70 during the early trading hours of the Asian session on Monday. However, US Dollar (USD) is experiencing selling pressure after the downbeat consumer sentiment data from the United States (US) released on Friday.
Preliminary Michigan Consumer Sentiment Index printed a reading of 67.7 against the previous 69.5 figure, which was expected 69.1 reading in September. Even so, US Dollar Index (DXY), which measures the performance of the Greenback against the six other major currencies, closed its ninth week with gaining of 0.26%. Spot price is trading around 105.20 at the time of writing.
Economic activity indicators, including Retail Sales for the same month and Jobless Claims for the second week of September, also displayed favorable outcomes for the US economy.
In terms of expectations regarding the US Federal Reserve (Fed), the probability of one more interest rate hike through the end of the year 2023 still remains relatively elevated. This indicates that the market is still factoring in the possibility of further tightening measures by the Fed.
Although there may be some degree of uncertainty or caution in these expectations. The Fed’s monetary policy decisions on Wednesday and further communications will continue to be closely monitored by market participants for any clues regarding the future direction of interest rates.
On the other hand, the Japanese Yen (JPY) has surrendered all the gains it saw following the Bank of Japan’s (BoJ) Governor Kazuo Ueda’s comments earlier in the previous week. Ueda’s comments suggested that the Bank of Japan (BoJ) may gather sufficient data by the end of the year to contemplate a policy shift, which initially boosted the JPY. However, this momentum gradually faded.
In the upcoming BoJ meeting on Friday, no alterations to the ultra-loose policy are anticipated, but market participants will eye any adjustments in the economic forecast.
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