Japanese Yen exposes to two-week low against US Dollar, US PMI eyed

The Japanese Yen (JPY) has been underperforming against the US Dollar (USD) as of the recent European trading session. The USD/JPY pair traded at 157.85, slightly above its two-week high of 158.05 reached on Friday. The US Dollar's strength is attributed to warnings of persistent inflation in the United States from various Federal Reserve (Fed) officials. The USD was the strongest against the Australian Dollar in the latest comparison.

The heat map of major currencies shows the percentage change of USD against each, with the base currency listed on the left and the quote currency on the top. Fed members have highlighted that the inflationary pressures stem from not only the energy shock but also from a strong demand environment. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, reached a fresh seven-week high near 100.89.

Analysts from ING believe that the US Dollar's resilience, despite lower energy prices and a risk-friendly environment, indicates the Federal Reserve's hawkish stance. Richmond Fed President Thomas Barkin has reiterated this point, suggesting that a single rate hike may not be sufficient to control inflation. Meanwhile, investors are awaiting the meeting between US President Donald Trump and Chinese leader Xi Jinping, as well as the preliminary US S&P Global Manufacturing PMI for September, which is expected to show a decline due to a slowdown in manufacturing and service sector activity.