The post Japanese Yen edges lower as the unwinding of carry trades slows appeared on BitcoinEthereumNews.com.

The Japanese Yen pulls back from six-month highs due to slowing unwinding of carry trades. The downside of the JPY could be limited due to increasing odds of further rate hikes by the BoJ. The US Dollar faces challenges from rising expectations of a 50-basis point rate cut by the Fed in September. The Japanese Yen (JPY) retreated from its six-month highs on Tuesday as the unwinding of carry trades slowed. However, the JPY strengthened against the US Dollar (USD) due to growing expectations that the Bank of Japan (BoJ) may implement further monetary policy tightening. The Bank of Japan raised its short-term rate target by 15 basis points (bps), adjusting it to a range of 0.15%-0.25%. Furthermore, the central bank announced a plan to cut its monthly purchases of Japanese government bonds (JGBs) to ¥3 trillion, starting in the first quarter of 2026. The upside potential for the USD/JPY pair may be constrained as the US Dollar encounters headwinds from increasing expectations of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September. The CME FedWatch tool shows a 74.5% probability of this rate cut at the September meeting, up sharply from the 11.4% chance reported just a week ago. Daily Digest Market Movers: Japanese Yen may rise further due to hawkish mood surrounding BoJ Japan’s Labor Cash Earnings data showed a 4.5% year-on-year increase in average income for June, surpassing both the previous 2.0% and the expected 2.3% readings. This is the highest increase since January 1997, reinforcing Japan’s transition toward a rising interest rate environment. According to Reuters, Federal Reserve Bank of San Francisco President Mary Daly expressed increased confidence on Monday that US inflation is moving towards the Fed’s 2% target. Daly noted that “risks to the Fed’s mandates are becoming…

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Filed under: News - @ August 6, 2024 3:22 am