30 Juli 2024, USD/JPY
USDJPY:
The USD/JPY currency pair is trading at a low level near 153.90 in the early Asian session on Tuesday. The pair saw gains reduced after retreating from 153.35, amid a risk-off sentiment and growing speculation of a rate hike by the Bank of Japan (BoJ). The interest rate decisions by the Bank of Japan (BoJ) and the Federal Reserve (Fed) on Wednesday will be of particular interest ahead of the US jobs data on Friday.
It is not anticipated that the US Federal Reserve will cut interest rates at its meeting this week, but it is expected that the groundwork for policy easing will be laid at the meeting scheduled for September. The CME FedWatch Tool data indicates that the probability of a Fed rate cut in September is now 100%, reflecting a quarter-percentage point reduction at the very least. The likelihood of a Federal Reserve interest rate cut is continuing to exert downward pressure on the US dollar against the Japanese yen in the near term.
In contrast, a Reuters poll of economists indicates that the Japanese central bank will increase rates by 10 basis points (bps) to 0.1%. ING has indicated that the BOJ may opt to raise rates by 15 basis points while simultaneously reducing its bond-buying programme. Strategists at OCBC FX have commented that the combination of BoJ policy normalisation and a possible Fed rate cut in the near term is an example of monetary policy convergence and should support USD/JPY to the downside.
Trade recommendation: Trading mainly by Sell orders from the current price level.
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