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USD/JPY retreats amid US Dollar weakness, BoJ decision and Japan CPI in focus

  • USD/JPY retreats from one-week highs as broad US Dollar weakness caps upside.
  • US data failed to lift the Dollar despite solid growth and steady inflation signals.
  • Focus shifts to Friday’s BoJ rate decision, Japan CPI, along with US PMI and UoM data.

The Japanese Yen (JPY) regains some ground against the US Dollar (USD) on Thursday, with USD/JPY edging lower amid broad weakness in the Greenback. At the time of writing, the pair is trading around 158.30, retreating from one-week highs touched earlier in the European session.

However, the pair lacks follow-through selling, as traders refrain from placing aggressive bets ahead of the Bank of Japan’s (BoJ) interest rate decision due on Friday. Markets widely expect the central bank to keep rates unchanged at 0.75%. Focus will instead shift to the post-meeting statement and press conference for clues on the timing and pace of the next potential hike.

At the same time, sentiment toward the Yen remains fragile amid growing fiscal concerns in Japan. Prime Minister Sanae Takaichi is preparing to dissolve parliament on Friday and call a snap election for February 8.

Markets are worried that a snap election could open the door to more government spending under Prime Minister Takaichi’s pro-stimulus agenda, reviving concerns about Japan’s already heavy public debt burden. This could further complicate and slow the BoJ’s cautious path toward policy normalization.

Japan’s National Consumer Price Index (CPI) data is also due on Friday, adding another layer of risk that could influence expectations around the BoJ’s monetary policy path.

In the United States, steady inflation and solid growth data did little to support the US Dollar. Core Personal Consumption Expenditures (PCE) for Q3 rose 2.9% QoQ, in line with expectations and unchanged from the previous quarter.

At the same time, the advance estimate showed the US economy expanding at an annualized pace of 4.4% in Q3, beating forecasts of 4.3% and accelerating from 3.8% in Q2.

Initial Jobless Claims rose slightly to 200K from last week’s revised 199K, but came in well below expectations of 212K.

Looking ahead to Friday, the US economic calendar features the preliminary S&P Global Purchasing Managers Index (PMI) surveys and the University of Michigan (UoM) Consumer Sentiment data.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.52%-0.57%-0.03%-0.34%-1.20%-1.11%-0.70%
EUR0.52%-0.05%0.48%0.20%-0.69%-0.59%-0.19%
GBP0.57%0.05%0.53%0.23%-0.64%-0.54%-0.15%
JPY0.03%-0.48%-0.53%-0.29%-1.14%-1.07%-0.65%
CAD0.34%-0.20%-0.23%0.29%-0.85%-0.77%-0.39%
AUD1.20%0.69%0.64%1.14%0.85%0.10%0.49%
NZD1.11%0.59%0.54%1.07%0.77%-0.10%0.40%
CHF0.70%0.19%0.15%0.65%0.39%-0.49%-0.40%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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