JPY/USD Nears Multi-month Highs

The Japanese yen (JPY) held on to its lead against the US dollar for a fifth day on Thursday on expectations that the Bank of Japan (BoJ) will soon end its negative interest rate policy. Meanwhile, yen bulls appeared unfazed by hawkish comments on Wednesday from Bank of Japan board member Seiji Adachi, who said the economy had not yet reached a stage where the central bank could discuss exiting ultra-easy monetary policy. On the economic data front, Japan’s retail sales missed consensus estimates in October, but an upward revision to last month’s data and better-than-expected industrial production data offset that disappointment.

Beyond that, underlying bearish sentiment surrounding the U.S. dollar (USD) – with growing sentiment that the Federal Reserve (Fed) is done raising interest rates – has kept the USD/JPY pair in the doldrums, approaching the three levels hit on Wednesday. Month low. The recent dovish comments made by many Federal Reserve officials have led the market to believe that the U.S. central bank may begin to loosen monetary policy as early as March 2024. The data showed the U.S. economy grew faster than originally expected between July and September. However, the data did not bring any respite to the US dollar, suggesting that the currency has the least resistance to the downside.

Still, bearish traders now appear reluctant to make aggressive bets ahead of the release of the U.S. PCE price index later in early North American trading. The core indicator is the Fed’s preferred benchmark for measuring long-term inflation trends and will play a key role in influencing next policy steps. This, in turn, will provide some meaningful momentum for USD/JPY and help set the near-term direction for USD/JPY ahead of Fed Chairman Powell’s speech on Friday.

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