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The Japanese Yen appreciates due to the hawkish sentiment surrounding the BoJ’s policy stance ahead of next week’s meeting. Japan’s Manufacturing PMI fell to 49.2 in July from a 50.0 reading; Services PMI surged to 53.9 from the prior 49.4. CME Group’s FedWatch Tool indicates an increase to 93.6% odds of a 25-basis point rate cut in September. The Japanese Yen (JPY) extends its gains for the third consecutive session on Wednesday, likely due to a return of risk-off flows. The Bank of Japan (BoJ) is anticipated to raise interest rates at next week’s policy meeting, prompting short-sellers to exit their positions and providing support to the JPY. A senior official in the ruling party, Toshimitsu Motegi urged the Bank of Japan (BoJ) to more clearly communicate its plan to normalize monetary policy through gradual interest rate hikes, according to Reuters. Prime Minister Fumio Kishida added that normalizing the central bank’s monetary policy would support Japan’s transition to a growth-driven economy. The US Dollar (USD) faces challenges due to rising bets on a Federal Reserve (Fed) rate cut in September, which put pressure on the USD/JPY pair. According to CME Group’s FedWatch Tool, markets now indicate a 93.6% probability of a 25-basis point rate cut at the September Fed meeting, up from 88.5% a day earlier. Traders await the data release of the US Purchasing Managers Index (PMI) data on Wednesday and the Gross Domestic Product (GDP) Annualized (Q2) figures on Thursday. These figures are expected to provide new insights into the economic conditions of the United States. Daily Digest Market Movers: Japanese Yen improves due to the return of the risk-off flows The Jibun Bank Japan Manufacturing PMI unexpectedly fell to 49.2 in July from 50.0 in the previous month, missing market forecasts of 50.5 and indicating the first…

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Filed under: News - @ July 24, 2024 4:20 am