Japanese Yen edges lower on the back of BoJ division and weak economic data
The Japanese Yen (JPY) edged lower during the Asian session on Tuesday after the Bank of Japan (BoJ) Summary of Opinions indicated a divided board over the need for an immediate policy tightening. Moreover, the disappointing release of Industrial Production data and Retail Sales figures from Japan, along with the underlying bullish tone across the global financial markets and trade uncertainties, undermine the safe-haven JPY.
Adding to this, a modest US Dollar (USD) uptick assists the USD/JPY pair to gain some positive traction and stall its recent retracement slide from the vicinity of the 150.00 psychological mark, or its highest level since early August, touched last Friday.
Traders, however, seem convinced that the BoJ will stick to its policy normalization path and are still pricing in the possibility of a rate hike in October. This marks a significant divergence in comparison to bets that the US Federal Reserve (Fed) will lower borrowing costs twice by the end of this year, which should limit deeper losses for the lower-yielding JPY.
Meanwhile, dovish Fed expectations, along with the risk of a potential US government shutdown, might keep a lid on any meaningful appreciation for the USD and the USD/JPY pair. This warrants caution before positioning for the resumption of the pair's recovery from the lowest level since July 7 touched earlier this month.
Source: FXstreet.com
