04 November 2024, USD/JPY
USDJPY:
The Japanese Yen (JPY) has strengthened on Monday in response to a weaker US Dollar (USD), potentially due to increased uncertainty surrounding Tuesday's US presidential election. However, due to the closure of Japanese markets for Sports Day, there is somewhat limited JPY liquidity, which in turn prevents trading in US Treasuries.
The yen may experience a weakening in the coming days due to the rise in political and monetary policy uncertainty following the Liberal Democratic Party (LDP) coalition's victory in parliament last week. This has led to confusion over the Bank of Japan's (BOJ) policy direction.
However, in a briefing following last Thursday's meeting, BOJ Governor Kazuo Ueda noted that economic risks in the US appear to be receding, which could pave the way for a potential rate hike. Meanwhile, the Bank of Japan has opted to maintain the current interest rate of 0.25%. This decision was widely anticipated.
The release of weaker-than-forecast non-farm payrolls (NFP) data for October may have contributed to the decline in the US dollar ahead of the Federal Reserve's (Fed) interest rate decision this week. According to the CME FedWatch Tool, there is a 99.6% probability that the Fed will reduce rates by a quarter point in November.
Trade recommendation: Trading mainly by Sell orders from the current price level.
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