Japanese Yen nears weekly high against broadly weaker USD
The Japanese Yen (JPY) strengthened again against the broadly weaker US Dollar (USD), dragging the USD/JPY pair back below the psychological 145.00 level during the Asian session on Thursday. The Bank of Japan (BOJ) – despite its hesitation to raise interest rates – is expected to stick to the path of monetary policy normalization as inflation continues to outpace its target. In contrast, the Federal Reserve’s (Fed) latest projections and the dot plot point to two more rate cuts before the end of the year, marking a significant divergence from the BOJ’s hawkish expectations. This was seen as a key factor benefitting the lower-yielding JPY.
Meanwhile, US President Donald Trump’s fresh threat that he is considering replacing Fed Chair Jerome Powell fueled concerns about the central bank’s independence. This overshadowed the recent optimism over the Israel-Iran ceasefire and dampened investors’ appetite for riskier assets, further bolstering the JPY’s safe-haven status. Additionally, the Trump-Powell standoff dragged the USD to its lowest level since March 2022 and contributed to the offered tone surrounding the USD/JPY pair. Traders now look forward to the final US Q1 GDP data for some impetus ahead of key inflation figures from Japan and the US, due on Friday.
Source: Newsmaker
