Japanese Yen consolidates as traders weigh weak US data, market sentiment
USD/JPY trades around 157.65 on Wednesday at the time of writing, little changed on the day, as weakness in the US Dollar (USD) is offset by investors' cautious stance toward the Japanese Yen (JPY).
On Wednesday, the Japanese Yen (JPY) held steady around 157.65 against the US Dollar (USD) as traders weighed weak US economic data and a cautious stance towards the Yen. The US Dollar faced pressure due to a series of weaker-than-expected US economic releases, including the ADP report showing private sector job growth of 44K in July, below market consensus of 70K.
The Services Purchasing Managers Index (PMI) for July stood at 54.1, slightly lower than expected at 54.5. However, services sector expansion was evident, while the Employment Index slipped to 47.4 from 51.2, indicating softer hiring conditions. The USD's decline was also due to reports of the US Treasury Department lifting Iran-related sanctions, signaling progress in US-Iran negotiations.
On the Japanese side, the Bank of Japan's (BoJ) June policy meeting minutes showed policymakers debating further rate hikes to counter inflation risks. BoJ Governor Kazuo Ueda reiterated the central bank's readiness to normalize monetary policy if conditions permit. Despite this, a Reuters poll indicated that most forex strategists believed Japanese authorities alone would not sustainably support the Yen.
Analysts at Brown Brothers Harriman noted that stronger wage data in Japan boosted BoJ rate hike expectations, with June total nominal wage growth matching consensus at 3.4% y/y. The implied odds of a 25 basis points BoJ rate hike at the September 18 meeting rose to 60%, suggesting a favorable outlook for the Yen.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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