Japanese Yen recovers further against USD, upside potential seems limited
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The Japanese Yen attracts some follow-through buying amid fears of a government intervention. The uncertainty over the BoJ’s rate-hike plans and the upbeat mood could cap the safe-haven JPY. Bets for a less aggressive Fed easing may underpin the USD and lend support to the USD/JPY pair. The Japanese Yen (JPY) kicks off the new week on a slightly positive note against its American counterpart and looks to build on Friday’s modest recovery from the vicinity of the lowest level since early August. The JPY draws some support from the recent verbal intervention from Japanese authorities, though the uncertainty over the timing and pace of further interest rate hikes by the Bank of Japan (BoJ) should cap any meaningful appreciating move. BoJ Governor Kazuo Ueda warned on Friday about the still high uncertainty surrounding the country’s recovery prospects and stressed the need to keep a close eye out for the impact of market volatility on the economy. This comes on top of Japanese Prime Minister Shigeru Ishiba’s surprise opposition to additional rate hikes and suggests that the BoJ will not rush to tighten its policy further ahead of the general election in Japan on October 27. This, along with the prevalent risk-on environment, should cap the safe-haven JPY. Meanwhile, expectations that the Federal Reserve (Fed) will proceed with modest interest rate cuts over the next year keep the US Treasury bond yields elevated and limit the US Dollar (USD) corrective decline from over a two-month high. This could further undermine the low-yielding JPY and support prospects for the emergence of dip-buying around the USD/JPY pair. Daily Digest Market Movers: Japanese Yen draws support from intervention fears, BoJ uncertainty is likely to cap gains Japan’s top currency diplomat, Atsushi Mimura, warned against speculative trading and said on Friday that authorities are…
Filed under: News - @ October 21, 2024 3:18 am