USD/JPY advances above 156.50 as risk-on sentiment undermines Japanese Yen
The USD/JPY pair gains ground to near 156.65 during the early Asian session on Wednesday. The Japanese Yen (JPY) softens against the US Dollar (USD) as the impact of the shock US capture of Venezuelan President Nicolas Maduro over the weekend was short-lived, undermining the safe-haven currency. Traders brace for the US ISM Services Purchasing Managers Index (PMI) report on Wednesday ahead of the US jobs data.
The US carried out a large-scale military strike against Venezuela on Saturday. Nonetheless, markets are largely shrugging off events in Venezuela, after a US raid led to the capture of Venezuelan President Nicolas Maduro and his wife. Cooling demand for safe-haven assets amid the risk-on sentiment weighs on the Japanese Yen and creates a tailwind for the pair.
Furthermore, the uncertainty over the timing of the next Bank of Japan (BoJ) rate hike also exerts some selling pressure on the JPY. BoJ Governor Kazuo Ueda said on Monday that rate increases will continue if economic and price trends align with the central bank's forecasts of a sustained inflation cycle. Most analysts anticipate the next hike around mid-year, after the spring "shunto" wage negotiations confirm solid wage increases.
On the other hand, dovish comments from Federal Reserve (Fed) officials might undermine the Greenback. Fed governor Stephen Miran, whose term ends at the end of January, noted on Tuesday that the US central bank needs to cut interest rates aggressively this year to keep the economy moving forward. Meanwhile, Minneapolis Fed President Neel Kashkari stated that he sees a risk that the jobless rate could "pop" higher.
Source: Fxstreet
