JPY/USD Rises to Highest Level Since September 14

In the Asian market on Wednesday, the Japanese yen (JPY) continued to benefit from the general selling trend of the US dollar, with the USD/JPY exchange rate falling below the 147.00 mark for the first time since September 14. Underlying U.S. inflation showed signs of slowing in October, reinforcing market views that the Federal Reserve may be done raising interest rates. In addition, dovish remarks by some Federal Reserve officials on Tuesday boosted interest rate cut bets, triggering a new round of declines in U.S. bond yields and pushing the dollar to a three-and-a-half-month low.

On the other hand, expectations that the Bank of Japan’s (BoJ) negative interest rate policy is about to end have increased, supporting the trend of the yen. Economic data last week boosted market bets by showing Japan’s key inflation gauge accelerated for the first time in four months and remained above the Bank of Japan’s 2 percent target for a 19th consecutive month. This is seen as another factor contributing to USD/JPY’s fourth consecutive day of losses. Nonetheless, positive market risk sentiment tends to weaken demand for safe-haven assets including the Japanese yen, which could provide some support to USD/JPY and prevent USD/JPY from falling lower.

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