- USD/JPY gives back some of the initial gains, while the Dollar retreats due to the decline in US yields.
- Tokyo Consumer Price Index data will be released on Friday.
- The CME's FedWatch tool shows that the odds of a Fed rate cut in March have fallen below 40%.
He USD/JPY trims some of its intraday gains, trading around the 147.60 level during the European session on Thursday. However, the USD/JPY pair attempted to recover the losses recorded in the previous session following the release of encouraging US Purchasing Managers' Index (PMI) data. In addition, the Tokyo Consumer Price Index will be published on Friday.
On Wednesday, the Japanese Yen (JPY) gained strength following the release of Japan's December merchandise trade balance total, which was better than expected. Besides, The Bank of Japan (BoJ) chose to keep its current interest rate and yield curve control policy intact. at their recent meeting on Tuesday. However, BoJ Governor Kazuo Ueda indicated his firm commitment to achieving the 2.0% inflation target. Ueda's statements hinted at the possibility of gradually reducing the extensive stimulus measures and taking short-term interest rates out of negative territory as the necessary conditions are met.
He S&P Global US PMI rose in January to an 11-month high of 50.3, exceeding forecasts that anticipated it would remain stable at 47.9 points. Additionally, the US services PMI recorded growth of 52.9, above forecasts of 51 and 51.4 the previous month.
Market caution regarding the US Federal Reserve's (Fed) interest rate decision on January 31 has contributed to increasing demand for the dollar. Although the market has already priced in the possibility of no tightening at the January meeting, the CME's FedWatch tool indicates a notable decrease in the probability of the Federal Reserve cutting rates in March, to below 40%. This marks a significant drop from the 80% probability recorded just a month ago. Traders are expected to closely monitor the release of US fourth-quarter annualized gross domestic product data, scheduled for Thursday, for additional information on the possible path of the Fed's interest rates.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
