- The Japanese Yen (JPY) is rising as trades remain on intervention watch
- The BoJ could cut rates as soon as December
- The US Dollar (USD) falls against major peers
- Fed rate cut expectations rise to 85%
The US dollar Japanese yen (USD/JPY) exchange rate is falling after gains yesterday. The pair rose 0.27% in the previous session, settling on Wednesday at 156.48. On Thursday at 21.30 UTC, USD/JPY traded -0.10% at 156.33 and traded in a range of 155.72 to 156.41.
The yen is modestly higher on Thursday as Investors are on high alert for an intervention by Japanese authorities, after weeks of verbal warnings.
Prime Minister Takaichi brushed off the likelihood of a Truss-style moment or loss of market confidence stemming from her administration’s fiscal plans. Japanese bond yields have risen sharply in recent weeks amid concerns over huge spending and a lack of fiscal credibility.
Meanwhile, the yen is finding some support on reports that the BoJ could be preparing a possible rate cut as soon as December to help support the currency.
Attention now turns to Tokyo inflation data, which is expected to cool slightly to 2.7% YoY from 2.8%.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading at -0.03% at 99.56, marking the fourth straight day of losses.
The USD traded quietly lower on Thursday, the Thanksgiving holiday. With U.S. markets closed, FX volumes are thin. The US dollar is on track to fall 0.6% across the week so far, marking its worst weekly performance since early August.
The US dollar has fallen amid rising expectations that the Federal Reserve will cut rates by 25 basis points in the December meeting. Recent weaker data and dovish commentary by Fed officials sees the market pricing in an 85% chance of a rate reduction, up from 30% two weeks ago.
This would mark a strong divergence from the BoJ, which could support the yen.
Looking ahead, tomorrow is a half-day for US markets, which could keep volumes thin until next week.
