USD/JPY Hovers Just Below 143.75

USD/JPY was higher on Wednesday as the greenback, the day’s top performer, overshadowed the day’s biggest loser, the Japanese yen (JPY). USD/JPY climbed 1.3% from bottom to top on Wednesday, falling from just below 143.75 to just below the 143.00 mark, ending Wednesday’s trading.

Fed minutes: Interest rates appear to be at or near peak

Minutes from the Federal Reserve’s December meeting showed that Fed policymakers may not go as far in cutting interest rates as the market hopes. Fed officials noted that while interest rates appear to be “at or near” their peak, key policy rates may remain elevated for longer than market participants currently anticipate. Federal Reserve Chairman Powell’s unexpected U-turn in December sharply increased market expectations that the Federal Reserve will cut interest rates in 2024.

In the upcoming Asian market on Thursday, China will release Purchasing Managers Index (PMI) data. China Caixin Services Purchasing Managers Index (PMI) will be released in advance at 9:45 Beijing time. The market expects this indicator to be released in December. It will recover slightly to 51.6 from 51.5 in November.

China’s Caixin manufacturing purchasing managers’ index (PMI) released on Tuesday exceeded expectations and unexpectedly rose, rising from 50.7 to 50.8, easily exceeding market expectations of 50.4. Thursday’s services PMI, if it also beats expectations, will help boost risk appetite as markets open up the second half of the first week of 2024.

The trading week will conclude with Friday’s U.S. nonfarm payrolls data, which is expected to edge down slightly to 168,000 in December from 199,000.

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